■■-3t*7>*> 


%\^}j!s 


GIFT  OF 
SEELEY  W.  MUDD 

and 

GEORGE  I.  COCHRAN    MEYER  ELSASSER 

DR.JOHNR.  HAYNES    WILLIAM  L.  OONNOLD 

JAMES  R.  MARTIN         MRS.  JOSEPH  F.  SARTORI 

to  the 

UNIVERSITY  OF  CALIFORNIA 

SOUTHERN  BRANCH 


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^4^    ^^^  1  ^   1927 

^/'-■'■^  2      1930 
^  \^M  1  6  1931 

^   '"      APR  2  5  1939 


^VTy       NOV  3  1  1945 
S'W:        MAY  1 1  1959 

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Industrial  Liberty 


JOHN    M.  BONHAM 


NEW  YORK  AND  LONDON 

G.  p.  PUTNAM'S    SONS 

She  ^nirlurbothtr  |lrtss 
1888 

82888 


COPYRIGHT   BY 

JOHN   M.   BONHAM 


Press  of 

G.  P.  Putnam's  Sons 

New    York 


3T3\ 


PREFACE 


d^        I  have  sought  in  the  following  pages  to  deal  with 
the  subject  of  industrial  liberty  in  a  manner  which 
seems  to  me,  in  some  respects,  different  from  any  that 
I  have  hitherto  noticed.     Aiming  to  keep  in  view 
principles  rather  than  statistics,  I  have  undertaken  to 
make  an  analysis  of  the  salient  political  and  industrial 
evils  of  our  time,  and  to  measure,  by  fundamental 
»     rules,  the  departure,  in  some  of  our  governmental  and 
CQ     industrial  methods,  from  these  principles.     Where  it 
H     has  been  necessary  to  employ  concrete  illustrations, 
^    I  have  endeavored,  as  far  as  possible,  to  make  a  dis- 
■^    passionate   and   an    impersonal   use  of  them.     It  is 
'^    not  assumed  that  the  ^vork  is   anything  more  than 
elementary,  since  it  has  been  my  purpose  rather  to 
indicate  a  line  of  in(piiry  than  to  attempt  an  exhaust- 
ive or  even  a  comprehensive  treatment  of  the  sub- 
ject ;  and  I  have  undertaken  my  task  with  the  hope 
that  others  better  equipped  may  possibly,  from  some 
of  the  suggestions  which  I  have  ventured  to  make, 
be  induced  to  engage  in  a  more  thorough  discussion 
of  those  underlying  principles  upon  which  modern 
industry,  in  order  to  be  wholesome,  must  rest. 

John  M.  Bonham. 

New  York,  yu/y  i,  1888. 


TABLE   OF   CONTENTS 


I. 

PACK 

Fundamental  Ideas 1-40 

Necessity  for  examination  of  principles  in  economic  discussions, 
1-2. — History  of  the  development  of  the  idea  of  liberty  in  England 
and  America,  2-16. — The  framing  of  the  Constitution  of  the 
United  States  and  its  interpretation  by  the  Supreme  Court,  16-21. 
— The  essential  conditions  of  industrial  liberty  and  their  founda- 
tion in  natural  right,  21-27. — The  definition  of  industrial  liberty, 
28. — How  far  the  idea  of  individual  sovereignty  is  recognized  in 
the  Constitution,  29-31. — How  far  contemplated  by  its  framers, 
32. — A  full  recognition  of  individual  right  necessary  to  political 
and  industrial  liberty,  33-40. 

II. 

The  Influence  of  the  Discovery  of  Steam  and  the 

Mechanical  Inventions  upon  Industry    .       41-72 

The  struggle  in  England  between  the  industrial  and  landed  inter- 
ests, 41-45. — The  influence  of  the  steam  factor  upon  social  and 
industrial  conditions,  45-49. — The  fallacy  of  inferring  political 
and  industrial  well-being  from  statistics  of  material  growth,  50-53. 
— The  disposition  in  economic  investigations  to  mistake  results  for 
causes,  54-56. — The  responsibility  for  the  condition  of  the  labor- 
ing classes,  57-60. — The  influence  of  the  steam  factor  upon  the 
law  of  population,  60-64,  68,  69. — Its  tendencies,  under  the  con- 
trol of  the  industrial  corporation,  adverse  to  the  growth  of 
liberty,  65-67,  70. 


vi  TABLE   OF  CONTENTS 

III. 

PAGE 

The  Industrial  Corporation      ....         73-95 

Analysis  of  the  quasi-public  corporation  and  its  methods,  Ti-T]. 
— The  necessity  for  recognizing  a  relation  of  trust  between  the 
holders  of  a  corporate  franchise  and  the  public,  77-84. — The  dis- 
tinction between  the  lesser  trust  for  the  benefit  of  the  stock- 
holder, and  the  larger  trust  for  the  benefit  of  the  public,  84-86. 
— The  history  of  the  development  of  the  law  governing  private 
trust,  87-91. — The  same  law  properly  applicable  to  the  corpora- 
tion in  its  relations  with  the  public  and  its  stockholders,  91-94. — 
The  results  of  the  failure  to  make  this  application,  93-94. — 
Fundamental  propositions,  94,  95. 

IV. 

The  Relation  of  the  Railway  and  the  "Trust"  to 

Industrial  Liberty    .....       96-128- 

The  idea  of  public  trust  involved  in  the  exercise  of  a  corporate 
franchise,  96—100. — The  appearance  and  growth  of  the  parasite  in 
railway  management,  and  illustrations  of  its  methods,  100-116. — 
The  development  of  the  "  Standard  Oil  Trust "  and  its  combina- 
tions with  the  railway  managers,  116-128. 

V. 

The  Influence  of  the  "  Trusts  "  and  Other  Para- 
sites upon  Industrial  Liberty         .         .     129-158 

Extended  operation  of  the  parasite  and  the  "  Trust,"  129,  130, 
138-141. — The  development  and  methods  of  the  "  Gas  Trust," 
130-138. — The  "  Trust  "  and  the  tariff,  141,  142, — Its  growth 
the  logical  result  of  corporate  aggression,  142-149. — Reform  to  be 
found  only  in  a  limitation  of  corporate  power  and  public  scrutiny 
of  corporate  methods,  149-153. — The  necessity  for  treating  porpo- 
rate  managers  as  trustees  for  the  jhiIjHc,  153-158. 

VI. 

Obstacles  in  the  Way  of  Reform  .         .         159-195 

The  Inter-State  Commerce  Commission  and  its  inadequacy  to  deal 
with  corporate  abuses,  159-163. — Discriminations  in   favor  of  the 


TABLE   OF  CONTENTS  vii 

PAGE 

"  Standard  Oil  Trust  "  disclosed  through  its  investigations,  164- 
172. — Privacy  not  a  right  of  the  quasi-public  corporation,  173-175. 
— Discussion  of  the  reforms  suggested  by  the  railway  managers 
and  their  inadequacy,  176-190. — The  influence  of  the  railway 
statesman  and  the  corporate  attorney,  190-195. 


VII. 


Obstacles  in  the  Way  of  Reform — Concluded  .     196-221 

Opposition  of  the  vested  interests,  196-199. — The  influence  of 
public  opinion,  199-207. — Limitation  of  the  courts  and  the  neces- 
sity for  an  amendment  to  the  Constitution,  209-212. — The  histori- 
cal progress  of  the  Anglo-Saxon  and  his  method  of  righting  his 
wrongs,  212-217. — The  Town  Meeting  an  inheritance  of  his  race, 
and  the  Corporation  a  gift  from  Rome.  His  probable  persistence 
until   the  ultimate   of   industrial   liberty  is  attained,  218-221. 

VIII. 

Protection 222-252 

Its  plausibility  as  an  expedient,  223,  224. — Historical  account  of 
its  growth  as  a  system,  225-229. — A  theorj'  and  not  a  principle, 
229-232. — The  eff'orts  of  the  protectionists  to  limit  production  by 
means  of  "  trusts,"  232-234. — Its  violation  of  natural  law,  234- 
239. — The  necessity  for  discussing  principles  rather  than  statistics, 
239-241,  249-251. — Its  responsibility  for  the  system  of  indirect 
taxation  and  the  surplus,  242-245. — Its  effect  on  the  agricultural 
and  laboring  classes,  246-249. 

IX. 

Paternal  Government 253-286 

What  constitutes  paternalism,  254-256. — Nature's  law  of  diversity 
of  faculty  and  diversity  of  resources,  255. — The  grades  in  the  in- 
dustries shown  by  the  United  States  census,  257,  258. — The 
generalizations  of  Quetelet,  258-260. — Man's  efforts  to  interfere 
with  natural  laws,  260-264. — The  distinction  between  political 
equality  and  the  assumed  equality  of  faculty,  266-270. — The  dis- 
tribution of  nature's  resources,  270-273. — The  idea  of  divine  right, 
276-278. — The  survival  of  this  idea  in  the  legislation  of  modern 
times,  279-285. 


VI ii  TABLE   OF   CONTENTS 

X. 

PACK 

Paternal  Government — Continued  .  .  286-326 
Definition  of  paternalism,  286-289. — The  common-school  system, 
289-326. — Origin  of  the  system  and  the  results  to  civilization 
promised  by  its  advocates,  296-301,  316. — The  results  after  fifty 
years  of  trial,  309-315,  317-321. — Its  antagonism  to  the  principles 
of  industrial  liberty,  298-306. 

XI. 

Paternal  Government — Continued  .  .  327-365 
The  interference  by  courts  and  legislatures  with  the  equality  and 
sanctity  of  contract,  327. — The  constituent  elements  of  contract, 
327,  328. — Why  corporate  charters  are  not  contracts,  330-336. — 
The  Dartmouth  College  case,  335. — Its  responsibility  for  corporate 
aggression  and  violation  of  industrial  right,  332-336. — The  Legal- 
tender  decision,  337. — The  mistaken  conception  of  sovereignty 
upon  which  it  is  based,  339-341. — Its  effect  in  impairing  the  obli- 
gation of  contract  and  its  influence  upon  private  morals,  341-344, 
350-352. — Usury  laws  and  their  influence  in  restricting  the  free- 
dom of  contract,  344-347. — Mistaken  policy  upon  which  they  pro- 
ceed, 348,  349. — Lien  laws  and  their  tendency  to  mar  self- 
dependence,  352. — Acts  of  government  that  are  not  paternal,  354- 
357. — Entire  absence  of  benevolence  and  generosity  in  a  free 
government,  35S-362. — Police  functions  and  what  they  include, 
362-365. 

XII. 

England  and  America  ;    the  Relation  of  Each   to 

Industrial  Liberty  ....         366-400 

The  rise  of  the  Whig  party  and  its  influence,  366. — Paternalism  in 
England  from  the  reign  of  Queen  Anne  to  the  repeal  of  the  Corn 
Laws,  366-36S. — The  conditions  in  America  after  the  Revolution, 
368. — The  steam  factor  and  the  changes  effected  by  it,  368,  369. — 
The  English  system  of  land  tenure  ;  its  restraints  upon  alienation 
and  the  effect  upon  industrial  progress,  369-372.  —  Efforts  of  the 
statical  class  to  preserve  ils  power  through  paternal  legislation, 
and  its  effect,  372-378. — The  continued  progress  of  industry  in  its 


TABLE    OF   CONTENTS  IX 

contest  with  the  statical  class,  379-381. — The  problem  of  industrial 
liberty  in  America  ;  her  advantages  and  disadvantages  in  compari- 
son with  England,  381-385. — Private  ownership  in  land,  and  its 
importance  in  preserving  industrial  incentive,  386-389. — The 
failure  of  analogy  between  the  democracies  of  Greece  and  Rome 
and  the  democracy  of  America,  393-397. — The  teachings  of  evo- 
lution in  regard  to  industrial  liberty,  and  the  ultimate  supremacy 
■of  intellectual  over  dynamic  forces,  397-400. 


INDUSTRIAL  LIBERTY 


CHAPTER  I 

FUNDAMENTAL    IDEAS 

Any  one  who  attempts  a  study  of  economic  ques- 
tions in  the  light  of  modern  research  cannot  fail  to 
be  imjDressed,  upon  the  threshold  of  his  inquiry,  by 
the  multiplicity  and  apparent  complexity  of  the  data 
involved  in  these  questions,  by  the  variety  and  con- 
flicting character  of  many  of  the  propositions  which 
are  suggested  for  reform,  and  still  more  strongly  by 
the  absence  of  any  one  central  and  clearly  defined 
principle  upon  which  there  can  be  a  substantial 
agreement.  The  statisticians  and  political  econo- 
mists keep  too  near  their  facts  and  figures,  and  regard 
their  subjects  mainly,  if  not  exclusively,  as  of  com- 
mercial quality ;  as  related  only  to  the  values  of 
labor  and  production,  to  capital  and  wages ;  as  sim- 
ply involving  dollars  and  cents  and  the  conveniences 
of  trade.  The  politician  approaches  them  diplomat- 
ically, and  offers  to  compromise  all  difficulties  with 
palliative  and  merely  expedient  measures.     Many  of 


2  INDUSTRIAL    LIBERTY 

the  "^vi'iters  on  economic  reform  are  occupied  in  con- 
fusing causes  mtli  effects,  and  in  tlie  endeavor  to 
niatcli  one  result  with  another.  Meanwhile  an  im- 
pression is  more  or  less  prevalent  among  the  people 
that  economic  laws  have  lost  their  sanction  and  their 
character. 

Under  these  cu'cumstances  a  rational  course  of  ex- 
amination would  seem  to  lie,  first,  in  an  effort  to  indi- 
cate precisely  and  simply  the  primary  qualities  of 
industrial  liberty,  particularly  as  related  to  the 
American  citizen;  then  to  marshal  existing  social 
and  industrial  conditions,  in  order  to  measure  them 
by  this  definition,  to  discover,  if  possible,  how  far 
they  have  deviated  from  it ;  and  thereafter  to  test,  by 
the  same  standard,  some  of  the  more  prominent 
propositions  for  reform. 

Lord  Bacon  says  that  it  is  the  "multiplicity  of 
single  facts  ^vhich  presents  nothing  but  confusion. 
The  middle  principles  alone  are  solid,  orderly,  and 
fruitful."  By  studying  these  "middle  principles" 
we  learn  their  essential  relation  to  each  other,  and  may 
also  illustrate  the  degree  of  cougruity  or  incongruity 
with  these  principles  which  exists  in  present  politi- 
cal and  industrial  conditions.  Following  this  course, 
I  will  first  briefly  sketch  the  early  progress  of  the 
English  people  towards  liberty. 

Magna  Charta  has  been  rather  commonly  and 
vaguely  regarded  as  a  great  charter  of  liberty.  It 
was,  in  point  of  fact,  a  very  imperfect  beginning.  It 
came  into  being  as  the  result  of  a  conflict  between 


FUNDAMENTAL    IDEAS  J 

governing  classes.  AVilliani  Mareschal,  Earl  of  Pem- 
broke, and  bis  associate  knights  and  barons,  had 
scarcely  any  more  perception  of  the  principles  of 
political  liberty,  in  their  modern  significance,  than 
had  King  John,  from  whom  the  Charter  was  wrested, 
and  the  Charter  itself  secured  but  little  to  the  mass 
of  the  people.  The  instrument  deserves  its  promi- 
nence in  English  history,  not  as  the  delineation  but 
as  the  foretokening  of  liberty.  A  distinguished 
writer  has  said  of  Mao;na  Charta  that  "  in  substance 
it  is  the  first  effort  of  a  corporate  life  that  has  reached 
full  consciousness,  resolved  to  act  for  itself,  and  able 
to  carry  out  the  resolution."  ^  Even  this  seems  an 
overstatement.  The  Charter  had  but  slight  effect 
upon  the  prevailing  law  of  tenure,  and  as  little  upon 
hereditary  establishment.  There  was  thereafter,  it  is 
true,  a  division  of  the  mastership,  which  had  for  some 
time  before  been  tending  to^vards  unity  in  the  per- 
son of  the  absolute  king.  In  consequence  of  this 
division,  feudal  oppression  began  to  be  somewhat  re- 
laxed ;  but  for  all  that  the  vassal  was  the  vassal  still. 
Of  all  the  seventy-nine  clauses  of  the  Charter,  only 
one  is  intended  to  j^rotect  the  working  people,  and 
this  merely  secured  to  them,  from  unjust  seizure, 
their  "  wainage,"  or  farming  implements. 

During  the  succeeding  reign,  Simon  de  Montfort, 
Earl  of  Leicester,  called  into  being  the  House  of 
Commons.    This  was  really  a  far  more  important  ad- 

'  Stubbs'    "Constitutional    History  of   England,"    N.   Y.,    l88o,  vol.    I.,, 
p.  6io. 


4  INDUSTRIAL   LIBERTY 

vance  towards  popular  liberty  tbau  the  securing  of 
the  Charter,  because  through  it  the  people  first 
gained  some  voice  in  the  general  government. 
Nevertheless,  we  must  not  conclude  that  in  this  act 
De  Montfort  Avas  impelled  by  a  spirit  of  liberty  in 
its  modern  signification.  As  Mr.  Stubbs  says  of 
him: 

"  He  was  greater  as  an  opponent  of  tyranny  than  as  a 
deviser  of  liberties.  The  fetters  imposed  on  royal  autoc- 
racy, cumbrous  and  entangled  as  they  were,  seem  to  have 
been  an  integral  part  of  his  policy.  The  means  he  took 
for  admitting  the  nation  to  self-government  wear  very 
much  the  form  of  an  occasional  or  party  expedient,  which 
a  longer  tenure  of  undivided  power  might  have  led  him 
either  to  develop  or  discard."  ' 

Moreover,  the  germ  of  the  parliament  lay  in  the 
primitive  institutions  of  the  Saxon  race,  and  while 
De  Montfort  has  the  merit  of  having  been  the  first 
to  see  the  immediate  uses  to  which  a  parliament 
might  be  put,  in  curtailing  the  absolute  power  of  the 
king,  it  cannot  be  supposed  that  he  conceived  the 
ultimate  tendency  of  that  representative  government 
toward  the  abolition,  not  only  of  the  king,  but  of 
his  own  class  ;  since  indeed  the  foremost  Englishmen 
of  to-day  are  not  altogether  ready  to  admit  this  re- 
sult as  the  final  outcome. 

The  Bill  of  Rights  is  another  acquisition  the  in- 
fluence of  which  lias  been  largely  exaggerated.  It 
was  really  a  bill  of  particulars.     It  set  forth  human 

'Stubbs'  "Constitutional  History  of  England,"  vol.  II.,  p.  lo8. 


FUNDAMENTAL   IDEAS  5 

rights  of  the  more  obvious  kind  and  commanded 
them  to  be  observed  thenceforth.  But  while  the 
items  thus  inventoried  belong  to  the  category  of 
freedom,  they  by  no  means  comprehend  the  whole 
principle.  They  were  but  its  adumbrations,  since 
they  did  not  even  remotely  indicate  any  rule  where- 
\>Y  political  rights  generally  are  to  be  ascertained. 

To  retui'n  to  the  historical  order.  During  the 
wars  between  the  houses  of  York  and  Lancaster,  the 
rights  of  the  people  were  to  some  extent  furthered  ; 
but  with  the  advent  of  the  Tudors  came  a  reaction 
towards  absolutism,  which  culminated  during  the 
reign  of  Henry  VIII.,  when  the  parliament  became 
little  more  than  the  registrar  of  the  royal  will.  The 
advance  of  political  freedom,  which  took  place  in 
the  reign  of  Elizabeth,  was  caused  largely  by  the  gen- 
eral awakening  which  accompanied  the  Kef  onnation, 
and  which  expressed  itself  in  England  in  a  reaction 
from  the  tyranny  of  Henry  VIII.  and  the  bigotry  of 
Mary. 

With  the  incoming  of  the  Stuarts,  however,  the 
absolute  idea  again  received  forcible  expression. 
James  I.,  even  before  his  accession,  formulated,  in 
his  work  on  the  "  True  Law  of  Free  Monarchy,"  the 
theory  of  an  absolute  royalty,  and  announced  that, 
"  although  a  good  king  will  frame  his  actions  to  be 
according  to  law,  yet  he  is  not  bound  thereto,  but  of 
his  own  will  and  for  example-giving  to  his  subjects." 
This  was  a  step  l^eyond  the  absolutism  of  the  Tudors, 
for,  as  Mr.  Green  has  pointed  out : 


6  INDUSTRIAL   LIBERTY 

"  'An  absolute  king,'  or  '  an  absolute  monarchy,'  meants, 
with  the  Tudor  statesmen  who  used  the  phrase,  a  sover- 
eign or  rule  complete  in  themselves,  and  independent  of 
all  foreign  or  Papal  interference.  James  chose  to  regard 
the  words  as  implying  the  monarch's  freedom  from  all 
control  by  law,  or  from  all  responsibility  to  any  thing  but 
his  own  royal  will.  The  king's  blunder,  however,  became 
a  system  of  government,  a  doctrine  which  bishops  preached 
from  the  pulpit,  and  for  which  brave  men  laid  their  heads 
on  the  block."  ' 

Mr.  Grreen  speaks  of  this  notion  as  if  it  were  wholly 
a  new  one  ;  but  while  it  had  never  been  so  definitely 
expressed  before,  it  is  a  dogma  which  has  been  acted 
upon  by  monarchs  in  one  degree  or  another  from  the 
beginning  of  histoiy.  It  is,  in  fact,  but  a  modificar 
tion  of  theocracy,  which  is  the  oldest  form  of  gov- 
ernment. From  the  passionate  adherence  mth  which 
James  and  his  successor  clung  to  this  theory,  the 
Commonwealth  came  into  being.  Then  followed  in 
order  of  time  the  Kestoration,  the  Abdication,  the 
Act  of  Settlement,  through  which  the  crown  was 
conferred  by  the  people,  and  the  gradual  develop- 
ment of  the  Constitution  of  England.  Through  all 
these  processes  there  were  lapses  and  advances  of 
the  liberties  of  the  people,  but  in  the  main  these 
liberties  were  enlarged  and  better  guarded. 

The  English  writers  of  the  seventeenth  and  eigh- 
teenth centuries,  but  particularly  the  eighteenth, 
made  marked  progress  in  the  definition  of  social  and 
economic  principles;  l)iit  they  were  not  so  successful 

'  "  A  Short  History  of  the  English  People,"  by  J.  R.  (Iroen,  p.  472. 


FUNDAMENTAL   IDEAS 


in  ascertaining  and  determining  the  ultimate  logical 
bounds  of  political  liberty.  John  Locke,  in  1G90, 
published  two  Treatises  on  Civil  Government,  in  de- 
fence of  the  principles  of  the  revolution  against  the 
Tories.  This  work  has  been  extensive  in  its  in- 
fluence, and  singular  in  the  diversity  of  that  in- 
fluence upon  three  peoples,  each  of  whom  it  helped 
to  an  entirely  different  interpretation  of  freedom. 
Thus  it  confirmed  the  English  peoj)le  in  the  Act  of 
Settlement  and  made  the  subject  contented,  under 
the  reign  of  William,  with  the  new  order  of  things 
inaugurated  by  that  settlement ;  it  had  an  important 
influence  in  urging  the  French  nation,  a  century 
later,  to  revolution  and  anarchy ;  while  in  America 
it  became  one  of  the  chief  sources  of  inspiration  for 
the  foundation  of  the  republic.  The  highest  pur- 
pose of  its  author,  as  he  himself  says,  was  "  to  estab- 
lish the  throne  of  our  great  restorer,  or  present 
King  William  ;  to  make  good  his  title  in  the  consent 
of  the  people,  which,  being  the  only  one  of  all  lawful 
governments,  he  has  more  fully  and  clearly  than 
any  prince  in  Christendom."  '  But  the  surroundings 
of  Locke  forbade  him  to  pursue  his  reasons  to  their 
legitimate  conclusion.  While  in  all  his  discussion 
he  saw  the  necessity  of  government  to  suj^port  the 
individual,  the  necessity  of  justice  in  government, 
and  the  right  of  the  people  to  overthrow  unjust 
governments,  he  believed  unqualifiedly  that  the 
government  which  could  best  accomplish  the  ends 

'  "  Locke  on  Government,"  Preface. 


O  INDUSTRIAL   LIBERTY. 

of  freedom  was  one  wMcli  had  a  kino'  and  an  order 
of  nobles,  a  constitutional  monarchy.  When  Ave 
come  to  analyze  his  definition,  we  see  that  his  typi- 
cal idea  of  political  liberty  cannot  convey  the  idea 
of  individual  freedom  of  self-government ;  for  self- 
government  and  government  founded  on  hereditary 
right  are  not,  and  cannot  be,  identical. 

Blackstone  similarly  makes  a  definition  which 
lacks  essential  completeness.  In  his  description  of 
civil  liberty  he  says  :  "  That  constitution  or  form  of 
government,  that  system  of  law,  is  alone  calculated 
to  maintain  civil  liberty  which  leaves  the  subject 
entire  master  of  his  own  conduct,  except  in  those 
points  in  which  the  public  good  requires  some 
direction  or  restraint."  '  In  considering  this  defini- 
tion we  must  take  into  account  the  intention  of  the 
definer,  especially  as  to  that  which  constitutes  the 
public  good.  Most  persons  would  cordially  agree 
that  the  public  good  is  the  great  end  to  be  desired, 
but  Avould  differ  very  widely  as  to  those  things 
which  constituted  this  public  good,  and  particularly 
as  to  the  kind  of  government  best  suited  to  secure  it. 
It  is  this  point  that  Blackstone's  definition  leaves  un- 
determined. He  tells  us  in  effect  that  a  political 
structure  is  best  calculated  to  maintain  civil  liberty, 
without  defining  that  structure ;  and  when  we  meas- 
ure his  definition  by  the  context,  we  have  every  rea- 
son to  infer  that  what  he  re2:ards  as  a  realization  of 
the  greatest  public  good  exists  in,  and  is  secured  by, 

'  "  Blackstone's  Commentaries,"  Book  I.,  p.  126. 


FUNDAMENTAL   IDEAS  9 

a  constitutional  monarchy,  just  as  we  have  reason  to 
believe  that  to  the  Czar  of  the  Russias  this  greatest 
public  good  seems  to  be  in  an  absolute  monarchy, 
and  to  an  American  citizen  it  seems  to  be  in  a  re- 
publican form  of  government.  When  Blackstone, 
comparing  all  forms  of  government  with  each 
other,  became  a  panegyrist  of  the  constitutional 
monarchy  of  Great  Britain,^  it  could  not  be  expected 
that  he  meant  to  comprehend  in  his  definition  that 
larger  idea  of  political  liberty  "  which  cannot  brook 
a  king."  And  indeed  to  any  citizen  of  a  monarchy, 
who  is  content  with  his  government,  such  larger  idea 
of  political  liberty,  instead  of  seeming  to  have  any 
quality  of  liberty  in  it,  must  appear  to  be  a  species 
of  treason. 

William  Penn's  definition,  which  conspicuously 
adorns  the  walls  of  Independence  Hall  at  Philadel- 
phia, has  been  held  up  as  a  classical  definition  of  a 
free  government.  He  says :  "  Any  government  is 
free  to  the  people  under  it  (whatever  its  frame) 
where  the  laws  rule  and  the  people  are  a  party  to 
those  laws ;  and  more  than  this  is  tyranny,  oli- 
garchy and  confusion." ""  This  definition  contains 
self-contradictions.  Besides,  when,  in  the  text  which 
prefaces  it,  the  definer  establishes  to  his  own  satis- 
faction the  doctrine  of  tlie  divine  right  of  kings, 
he  thereby  entirely  disqualifies  himself  for  realizing 
the  qualities  of  political  liberty,  and  his  definition 

'  "  Blackstone's  Commentaries,"  Book  I.,  p.  51. 
*  Preface  to  "  Frame  of  Government,"  Colonial  Records,  vol.  I.,  p.  31. 


lO  INDUSTRIAL   LIBERTY 

cannot  therefore  be  regarded  as  containing  such  a 
conception  of  political  liberty  as  that  of  which  I  am 
H0^7  treating.  Penn  was  a  E-oyalist,  and  he  could 
not  entertain  any  idea  of  forming  a  govei^nment 
which  involved  absolute  independence  of  the  mon- 
arch from  whom  he  received  his  charter  of  Pennsyl- 
vania. His  very  acceptance  of  that  charter  implied 
a  pledge  of  fealty  to  the  hereditary  monarch  who 
claimed  title  to  the  vast  domain  of  America  by  the 
accident  of  his  birth.  Penn  received  the  province 
as  a  fief  under  the  condition  of  feudal  allegiance,  the 
direct  considerations  of  the  grant  being  the  military 
service  of  the  father  of  the  grantee,  the  rendering  of 
tribute  by  the  payment  of  two  beaA^er  skins  yearly, 
the  fifth  part  of  all  the  gold  and  silver  to  be  found 
in  the  domain,  the  continued  faith  and  allegiance  of 
the  people  of  the  province  to  the  monarch,  and  the 
transmitting  of  all  the  laws  enacted  within  the 
province  to  the  privy  council  of  Great  Britain,  for 
the  rejection  of  all  such  as  might  be  deemed  incon- 
sistent with  the  royal  prerogative.  Under  such  cir- 
cumstances as  these  Penn  could  not  have  adequately 
conceived  that  idea  of  liberty  whereby  each  one  of 
the  citizens  of  the  commonwealth  which  he  estab- 
lished was  to  be  a  freeman,  a  guardian  of  himself,  of 
his  rights,  and  of  the  associated  rights  of  others — a 
sovereign  in  his  OA\ai  capacity,  hostile  to  any  notion 
of  domination  by  birth. 

Montesquieu's    "  Esprit  des  Lois "  held    a    high 
place  among   the    framers  of   the  Constitution.     It 


FUNDAMENTAL  IDEAS  II 

was  a  source  of  inspiration  to  them.  Washington 
wdtli  his  own  hands  copied  an  abstract  of  it  made 
by  Madison. '  Montesquieu  was  of  the  lawyer  no- 
bility, and  held  his  judicial  position  as  an  hereditary 
possession.  He  was  thoughtful  and  scholarly,  and 
his  work  is  characterized  by  a  great  love  of  system  ; 
but,  measured  by  the  standards  of  to-day,  it  must  be 
admitted  that  parts  of  it  are  very  defective.  AVhile 
he  is  broad,  profound,  and  brilliant,  he  does  not  at- 
tempt to  grapple  Avith  despotism  in  order  to  over- 
throw it.  His  chief  service  was  that  he  set  men 
thinking  ;  he  did  not  resolve  their  problems.  As  with 
the  other  "\mters  whom  I  have  named,  his  environ- 
ments precluded  the  possibility  of  his  forming  a 
definition  of  political  liberty  which  could  stand  the 
test  of  concrete  illustration.  In  the  multitude  of 
the  suggestions  "which  he  does  give,  taken  one  with 
another,  there  is  great  variety  and  contradiction. 
Many  of  them  point  in  diametrically  opposite  direc- 
tions. While  some  of  these  suggestions  have  been 
beneficially  used  in  the  construction  of  modern  po- 
litical liberty,  others  have  been  made  the  basis  of 
the  Avildest  political  theories.  Thus,  for  instance, 
Montesquieu  is  doubtless  the  originator  of  the  idea 
by  which  we  have  made  co-ordinate  the  legislative, 
the  executive,  and  the  judicial  branches  of  our  gov- 
ernment. ^  Yet  his  dictum,  that  in  commercial  coun- 
tries it  is  the  duty  of  the  government  to  exercise  a 

'  Bancroft's  "History  of  the  Constitution,"  vol.  II.,  p.  g.  New  York,  1885. 
^  "Spirit  of  the  I^aws,"  Book  XL,  ch.  6. 


12  INDUSTRIAL   LIBERTY 

paternal  care  in  furnisliing  work  to  every  man,  has 
become  one  of  the  fundamental  claims  of  that  branch 
of  socialism  which  was  lately  led  by  Louis  Blanc. ' 

As  Madison  says  of  him  :  "  He  appears  to  have 
viewed  the  Constitution  of  England  as  the  standard, 
or,  to  use  his  o\\ti  expression,  as  the  mirror  of  politi- 
cal liberty."  ^ 

While  Jeremy  Bentham,  in  his  "  Constitutional 
Code,"  fixes  the  sovereignty  in  the  whole  people  and 
says  "  it  is  best  to  give  the  sovereign  power  to  the 
largest  possible  portion  of  those  w^hose  greatest  hap- 
piness is  the  proper  and  chosen  object,"  ^  he  assumes 
for  this  sovereignty  something  more  than  human 
power.  Government,  according  to  him,  fulfils  its 
function  "  by  creating  rights  which  it  confers  upon 
individuals,"  '^  instead  of  confining  itself  to  declaring 
and  enforcing  rights  which  grow  out  of  custom  and 
usage,  in  accordance  with  natural  law.  Thus,  while 
he  seats  the  power  in  the  majority,  and  so  far  indi- 
cates democracy,  his  assumption  is,  that  the  power 
so  conferred,  unlike  a  power  derived  from  agree- 

'  "  Spirit  of  the  Laws,"  Book  XXIII.,  ch.  29. 

Nothing  could  be  more  grotesque  than  some  of  the  reasons  set  forth  by 
Montesquieu  in  support  of  slavery  :  such,  for  instance,  as  that  "  sugar 
would  be  too  dear  if  the  plants  which  produced  it  were  cultivated  by  any 
other  than  slaves";  that  "these  creatures  are  all  over  black,  and  with 
such  a  flat  nose  that  they  can  scarcely  be  pitied"  ;  that  "the  negroes  pre- 
fer a  glass  necklace  to  that  gold  which  polite  nations  so  highly  value — can 
there  be  a  greater  proof  of  their  wanting  common-sense?  "  ;  and  that  "  itis 
hardly  to  be  believed  that  God,  who  is  a  wise  Being,  should  place  a  soul, 
especially  a  good  soul,  in  such  a  black,  ugly  body." — "  Spirit  of  the  Laws," 
vol.  XV.,  ch.  5. 

"^  Federalist,  No.  47. 

'  Bentham 's  Works,   Bowering's  edition,  vol.  IX.,  p.  97. 
"*  Id.,  vol.  I.,  p.  301. 


FUNDAMENTAL  IDEAS  13 

ment,  unlike  any  human  power,  is  possessed  of  a 
supernatural  quality.  As  Herbert  Spencer  says, 
commenting  upon  this  process  of  reasoning  : 

"  The  sovereign  people  jointly  appoint  representatives 
and  so  create  a  government ;  the  government  thus  created 
creates  rights ;  and  then,  having  created  rights,  it  confers 
them  on  the  separate  members  of  the  sovereign  people 
by  which  it  was  itself  created.  Here  is  a  marvellous  piece 
of  political  legerdermain !  .  .  .  Surely,  among  meta- 
physical phantoms  the  most  shadowy  is  this,  which  sup- 
poses a  thing  to  be  obtained  by  creating  an  agent,  which 
creates  the  thing,  and  then  confers  the  thing  upon  its 
creator ! "  * 

Bentbam,  often,  in  treating  of  liberty,  combines 
the  polemical  "with  the  philosophical,  the  practical 
with  the  theoretical,  and  not  unfrequently  confounds 
them.  His  doctrines,  in  the  translation  of  M.  Dumont, 
were  propagated  through  Europe,  and  became  more 
popular  abroad  than  at  home.  This  was  partly  due 
to  the  circumstance  that,  in  the  process  of  transla- 
tion, many  of  the  vagaries  of  terminology  were 
eliminated  ;  but  more  to  the  fact  that  there  was  so 
much  in  Bentham's  writings  that  afforded  support 
to  the  wildest  theories  of  the  wildest  theorists.  It 
was  for  this  that  they  received  their  greatest  favor 
in  France.  '^ 

'  "  The  Man  versus  \\\^  State,"  New  York,  p.  38. 

•  Jeremy  Bentham  doubtless  did  a  large  service  to  the  world  in  chal- 
lenging a  great  number  of  words  that  had  been  masquerading  in  the  lan- 
guage under  false  meanings,  lie  did  this  especially  in  his  "  Book  on 
Fallacies,"  in  which  he  has  a  chapter  on  "  Impostor  Terms."  Unfor- 
tunately, however,  he  sometimes  fell  under  his  own  ban  ;  and  Herbert 
Spencer  furnishes  several  trenchant  illustrations  of  this  in  Bentham's  efforts 
at  the  treatment  of  ultimate  human  rights. 


14  INDUSTRIAL   LIBERTY 

I  have  mentioned  only  a  few  of  the  more  import- 
ant of  the  political  writers  of  the  eighteenth  cen- 
tury, but  it  may  be  fairly  said  of  all  of  them,  that 
they  made  definitions  of  liberty  for  M^hich,  by  rea- 
son of  their  environment,  they  could  not  furnish 
clear  illustrations ;  since  behind  all  their  illustra- 
tions lay  their  acceptance  of  the  ideas  and  govern- 
ments under  which  they  lived.  Under  the  laws  of 
these  governments  there  existed  these  essential  pos- 
tulates— a  ruling  class  and  a  ruled  class, — a  ruling 
class  by  assumed  hereditary  right,  and  a  ruled  class 
by  assumed  hereditary  necessity ;  and  where  these 
are  postulates,  any  definition  of  human  liberty  must 
be  inadequate.  It  is  for  this  reason  that  whilst  the 
English  Constitution  marks  the  early  development 
of  liberty,  it  does  not  exhibit  its  grow^th  and  stature. 
Where  the  existence  of  a  Idng  is  assumed  to  be  an 
essential  of  government,  there  cannot  be  any  com- 
plete realization  of  that  quality  of  liberty  which  is 
comprehended  in  the  political  equality  of  all  men 
before  the  law — of  that  kind  of  government  which 
is  maintained  only  through  the  delegated  servants  of 
the  people. 

We  have  to  acknowledge,  indeed,  that  we  owe  a 
great  debt  to  England.  From  her  Ave  received  an 
inestimable  boon  in  the  body  of  the  great  Common 
Law,  that  firm  foundation  of  occidental  civilization. 
But  in  accepting  the  Common  Law  from  England, 
we  did  not  take  all  that  belonged  to  it.  Its  primo- 
geniture and   entailments,  its  class  distinctions  and 


FUNDAMENTAL   IDEAS  1 5 

class-government,  were  largely  discarded.  What  we 
did  bring  with  us  to  America  was  the  sturdy  Anglican 
spirit  of  the  people,  which  gradually  appropriated 
and  established  the  fundamental  law  in  support  of 
fuller  individual  liberty.  In  the  new  country,  un- 
encumbered by  traditionary  restraints,  this  instinct 
had  larger  scope ;  and  it  is  to  it,  therefore,  that  we 
owe  all  of  the  true  qualities  of  this  larger  sense  of 
liberty  which  we  have.  Indeed,  it  is  by  this  in- 
stinct that  liberty  made  whatever  progress  exists  in 
any  of  the  countries  of  Western  civilization  ;  for, 
although  restrained  and  hindered  in  Europe,  when 
we  look  for  its  genesis,  we  find  that  it  has  come  from 
the  demands  of  the  people,  and  not  from  the  free- 
will of  the  rulers — not  from  the  graciousness  of  the 
rulers,  but  from  their  failings,  and  through  the  resist- 
ance of  this  popular  instinct  against  tyranny.  Thus 
it  was  King  John's  weakness,  and  not  his  good-will, 
that  enabled  the  knights  and  barons  to  secure  the 
Charter.  It  was  the  bigotry  and  obstinacy  of 
Charles  which  called  the  Commonwealth  into  being. 
The  English  parliament  enlarged  its  power  by  the 
flight  of  James  II.;  the  Act  of  Settlement  was  born 
of  his  abdication,  and  nothing  was  more  favorable 
to  the  continued  growth  of  that  parliament  than  the 
weakness  of  the  first  two  Georo-es  in  absentins;  them- 
selves  in  their  beloved  Hanover  and  neglecting  their 
English  subjects.  But  in  America,  largely  by  rea- 
son of  the  absence  of  clogging  traditions  and  ten- 
ures which  belonged  to  the  Common  Law,  political 


1 6  INDUSTRIAL   LIBERTY 

liberty  received  a  more  practical  and  a  broader  inter- 
pretation than  it  ever  had  before.  Here,  for  the 
first  time  in  the  history  of  the  world,  it  was  set 
forth,  not  with  instances  merely,  but  as  an  almost 
universal  principle '  ;  and  thus  set  forth,  it  was  crys- 
tallized into  the  fundamental  declaration  and  law  of 
the  people.  Samuel  Adams,  the  father  of  the  Town- 
meeting,  and  Thomas  Jefferson,  the  author  of  the 
Declaration  of  Independence,  were  of  the  leaders 
during  the  Revolution  and  for  some  time  after.  If 
we  contrast  the  representative  men  of  each  pe- 
riod, we  may  readily  realize  the  difference  existing 
betw^een  those  very  limited  conceptions  of  liberty 
which  prevailed  in  the  reign  of  King  John,  and  the 
comprehensive  idea  of  it  which  marked  the  Ameri- 
can revolutionary  period. 

William  Mareschal,  Earl  of  Pembroke,  and  Simon 
de  Montfort,  Earl  of  Leicester,  were  aristocrats  and 
warriors  of  an  essentially  militant  23eriod.  They 
fought  for  their  class ;  they  accorded  to  their  de- 
pendent husbandmen  a  minimum  of  the  results  of 
their  triumph. 

Samuel  Adams,  the  son  of  a  New  England  brewer, 
and  Thomas  Jefferson,  the  son  of  a  Virginia  farmer, 
were  of  the  people  and  for  the  people.  They  advo- 
cated the  principle  of  equality  for  all  men  before  the 
law,  a  principle  not  restricted  to  any  people,but  for  the 
world  at  large — political  liberty  for  the  human  race. 

^  The  qualification  which  it  is  necessary  here  to  make  is,  of  course, 
African  slavery. 


FUNDAMENTAL   IDEAS  17 

From  tliis  time  forth  it  was  intended  that  political 
liberty,  clothed  in  a  new  nomenclatui'e,  should  be- 
come a  rule  of  life  ;  that  the  governing  power  should 
have  no  hereditary  quality  Avhatever.  The  ruler 
thereafter  was  to  receive  the  rules  from  the  ruled, 
and  to  acknowledge  that  sole  constituent  authority. 
The  fundamental  principle  was  set  forth  that  no  one 
man  was  born  into  the  world  with  any  right  to 
govern  other  men  ;  that  the  man  who  became  a 
leader  must  become  so  by  his  qualities  for  executing 
the  will  of  his  constituents,  and  for  preserving  the 
equal  power  of  those  constituents  ;  and  this  principle 
was  to  be  borne  out  in  all  the  relations  of  government. 

The  work  of  framing  the  Constitution,  it  is  true, 
was  only  in  part  creative.  The  framers  took  as  their 
basis  the  British  Constitution,  which  was  the  result 
of  the  slow  development  of  time,  and  upon  this  it 
was  necessary  to  make  great  structural  changes.  A 
distino^uished  writer '  has  said  that  their  work  con- 
sisted  chiefly  in  taking  the  British  Constitution  and 
filling  in  the  interstices.  They  did  vastly  more  than 
this.  They  eliminated  the  titles  of  nobility  and 
political  class-distinctions  of  all  kinds,  and  substituted 
in  the  place  of  them  institutions  which  should  fall 
into  congruity  with  the  necessities  of  life  under  self- 
government.  These  were  organic  changes,  and  this 
work  required  the  highest  order  of  constructi\'e 
skill.  Even  a  constitution  which  is  the  result  of 
gradual  development  can  never  be  said  to  be  fin- 

^  Maine  on  "  Popular  Government,"  New  York,  1886,  p.  253. 


INDUSTRIAL  LIBERTY 


ished  until  development  ceases ;  because  that  wliicli 
is  created  by  development  must  continue  to  change 
by  further  development.  In  order  to  make  a  consti- 
tution which  shall  assimilate  with  selected  parts  of 
one  which  has  been  evolved,  so  that  the  result  will 
fully  answer  new  and  untried  conditions,  it  is  neces- 
sary that  the  fundamental  principles  of  political 
development  be  thoroughly  studied  and  understood. 
The  fathers  of  the  republic  brought  to  this  task  that 
variety  and  quality  of  skill  and  learning  which  were 
necessary  for  this  accomplishment.  They  were  ac- 
quainted with  ancient  history,  and  with  the  ancient 
republics ;  wdth  the  French,  English,  Swiss,  and 
Dutch  literature  on  government ;  with  the  British 
Constitution ;  and  with  the  Constitutions  of  the 
several  states  of  the  Federation.  They  had  eminent 
legal  ability,  the  sagacity  and  patriotism  of  the 
statesman,  and  the  wisdom  of  the  political  philoso- 
pher. Thus  equipped  they  accepted  the  authority 
of  the  past ;  not  mth  absolute  submission,  but  for 
the  suggestions  it  contained  for  the  application  of 
principles  to  existing  and  prospective  circumstances. 
They  measured  present  progress  and  tendencies  by 
history  and  by  experience,  avoiding  too  close  an 
adherence  to  history  and  too  ready  an  acceptance  of 
speculative  theory.  They  walked  in  the  middle 
path,  and  recognizing  in  the  progressive  movement 
of  civilization  a  uniformity,  a  persistence,  an  enlarge- 
ment of  scope,  they  establislied  political  institutions 
that  should  work  in  harmony  with  these. 


FUNDAMENTAL   IDEAS  1 9 

The  history  of  the  Convention  furnishes  abundant 
evidence  that  there  were  acts  of  A\'eakness  as  well  as 
acts  of  valor;  pusillanimity  and  courage ;  selfishness 
and  patriotism ;  chicane  and  statesmanship ;  and 
that,  after  the  Constitution  was  comj)leted,  there 
was  a  2;reat  deal  of  confusion  and  discussion  before  it 
was  adopted.  Still,  the  controlling  spirit  of  these 
fathers  in  thus  welding  the  freedom  of  America 
upon  the  best  qualities  of  the  Constitution  of  Great 
Britain,  was  a  spirit  characterized  by  sagacity,  cour- 
age, fidelity,  and  statesmanship.  One  of  the  best 
evidences  to  us  of  the  prevalence  of  these  qualities, 
is  to  be  found  in  the  prominence  which  the  American 
Constitution  holds  in  the  eyes  of  the  whole  of  Western 
civilization,  and  in  its  growing  influence  upon  the 
development  of  European,  and  especially  English, 
thought.  The  manner  in  which  this  Constitution 
has  remained  in  substantial  cougruity  with  our  own 
subsequent  development ;  in  which  it  has  restrained 
where  restraint  was  necessary,  and  enlarged  where 
freedom  grew ;  the  manner  in  which  it  has  borne 
the  nation  thi'ough  the  crisis  of  a  civil  war,  has  not 
only  proven  the  sum  of  the  great  \risdom  thus  exer- 
cised, but  it  also  affords  warrant  for  the  belief  that 
we  shall  be  enabled,  with  moderate  structural  changes, 
to  adjust  and  assimilate  to  it  the  phenomenal  activ- 
ities of  this  and  coming  generations. 

In  some  respects  no  time  was  ever  more  propitious 
for  affording  a  measure  of  the  stature  of  political 
liberty  than  the  post-Revolutionary  period  of  Amer- 


20  INDUSTRIAL  LIBERTY 

ica,^ — that  period  during  ^wliicli  the  Supreme  Court 
was  called  upon  to  define  the  Constitution  under 
practical  tests.  The  lessons  ^vhich  were  studied 
came  from  two  certain  opposing  tendencies.  The 
French  Revolution  had  just  illustrated  the  excesses 
of  anarchy.  The  French  nation,  having  beeu  op- 
pressed for  centuries  by  monarchical  restraints,  had 
just  broken  all  bounds.  The  political  pendulum  had 
swung  from  the  extreme  of  despotism  to  the  extreme 
of  ochlocracy.  The  rabble  arrayed  the  Demon  of 
License  in  the  robes  of  the  Goddess  of  Liberty.  The 
English  nation  contemplated  with  the  utmost  horror 
the  conditions  which  thus  prevailed  in  France. 
English  legislation  was  for  a  time  completely  para- 
lyzed. The  excesses  of  the  Reign  of  Terror  called 
into  being  a  feeling  of  revulsion  against  all  freedom. 
It  came  to  be  assumed  that  the  freedom  of  the 
masses  inevitably  tended  toward  the  unbridled  ex- 
cesses of  the  mob.  It  was  a  most  fortunate  circum- 
stance, at  this  time,  that  the  interpretation  of  our 
Constitution  was  in  the  hands  of  men  of  profound 
legal  attainments,  historic  Avisdom,  and  judicial 
temper. 

Addressing  themselves  to  the  problem  of  adapting 
the  Constitution  to  practice,  they  studied  the  two 
extremes  which  immediate  history  thus  afforded 
them.  As  causes  arose  that  involved  questions  of 
constitutional  construction,  they  defined  certain 
essential  qualities  of  liberty  by  clearly  drawing  the 
line  between  unbridled  excess  on  the  one  hand  and 


FUNDAMENTAL   IDEAS  21 

the  undue  restraints  of  hereditary  government  on 
the  other.  Thus,  through  a  long  series  of  decisions, 
they  familiarized  the  people  with  the  political  prin- 
ciple that,  whilst  ^vith  the  people  rested  the  sover- 
eignty, in  public  and  individual  self-restraint  lay  the 
true  means  of  guarding  and  preserving  that  sover- 
eignty.^ 

Let  us  now  briefly  examine  the  industrial  law  of 
society,  in  its  fundamental  operation,  as  related  to 
this  liberty,  in  order  that  we  may  endeavor,  from  such 
examination,  to  construct  the  precise  definition  of  the 
qualities  of  American  political  and  industrial  liberty. 

We  may  set  it  do^vn  as  a  primal  fact,  that  activity 
is  a  normal  and  necessary  condition  of  the  human 
race  ;  and  as  corollaries  from  this  fact,  that  this  activ- 
ity is  best  secured  when  each  individual  is  engaged 
in  that  particular  occupation  which  most  tends  to 
develop  his  industrial  faculties  ;  and  that  the  highest 
incentives  to  this  activity  are  to  be  found  in  the 
right  of  each  individual  to  get,  gather,  hold,  and, 
with  certain  limitations  which  I  shall  presently 
notice,  to  bequeath  property.  =" 

'  Had  it  not  been  for  slavery,  the  fathers  of  the  republic  would  have  gone 
within  one  step  of  defining  the  ultimate  of  political  and  industrial  liberty. 
But  the  sin  of  slavery  cannot  be  charged  to  Jefferson.  He  employed  all  his 
influence  for  the  extirpation  of  the  slave-trade  and  the  deportation  of  the 
slaves.  He  sought  to  incorporate  in  the  Declaration  of  Independence  a 
clause  in  which  he  truly  charged  the  English  government  with  the  responsi- 
bility for  the  African  slave-trade  ;  and  it  was  his  highest  boast,  forty-five 
days  before  his  death,  that  he  had  ever  thus  used  his  efforts  in  behalf  of 
freedom.     (See  Jefferson  to  James  Ileaton,  May  20,  1S26.) 

^  Baron  Wilhelm  von  Humboldt,  in  his  treatise  entitled  "The  Sphere 
and  Duties  of  Government,"  strikes  the  keynote  of  individuality  in  one  sen- 


22  INDUSTRIAL   LIBERTY 

The  acquisitions  of  each  man  repi'esent  his  strug- 
gles, his  risk,  his  skill,  prudence,  foresight,  and  absti- 
nence ;  his  gains  are  for  his  family,  his  old  age,  and 
for  his  children's  beginnings.  In  the  confidence  and 
security  with  which  he  can  hold  and  bequeath 
property  lie  the  great  incentives  for  the  struggle  to 
acquire  it.  It  is  in  order  to  make  these  incentives 
complete  that  the  iudividual  may  bequeath  his 
acquired  property  to  those  who  come  within  the 
bounds  of  his  natural  affection ;  it  is  to  prevent  the 
lessening  of  these  incentives  that  the  individual  can- 
not create  indefinite  perpetuities,  which  would  tend 
to  interfere  with  the  free  activities  of  subsequent 
generations.  In  a  word,  the  incentives  of  the  acqui- 
sition of  property  and  the  security  of  its  possession 
are  things  of  paramount  importance,  because  they 
constitute  the  great  mainspring  of  all  industrial 
endeavor;  and  when  these  are  thus  guaranteed  to 
every  one  equally,  the  most  constant  acti^dty  is 
thereby  promoted,  and  the  largest  sum  of  human 
activity  follows.  It  is  this  variation  and  diffusion  of 
freedom  which  produce  the  greatest  sum  of  human 

tence.  He  says:  "  The  end  of  man,  or  that  which  is  prescribed  by  the 
eternal  or  immutalile  dictates  of  reason,  and  not  suggested  by  vague  and 
transient  desires,  is  the  highest  and  most  harmonious  development  of  his 
powers  to  a  complete  and  consistent  whole  "  ;  that,  tlicrefore,  the  object 
"  toward  which  every  human  being  must  ceaselessly  direct  his  efforts,  and 
on  which  especially  those  who  design  to  influence  their  fellow-men  must  ever 
keep  their  eyes,  is  the  individuality  and  power  of  development "  ;  that  for 
this  there  are  two  requisites,  "freedom  and  a  variety  of  situations  "  ;  and 
that  from  the  union  of  these  arise  "individual  vigor  and  manifold  diver- 
sity." ("The  Sphere  and  Duties  of  Government,"  from  the  German  of 
Baron  Wilhelm  von  Humboldt,  pp.  11-13.) 


FUNDAMENTAL   IDEAS  23 

energy,  the  greatest  sum  of  human  skill,  the  greatest 
sum  of  human  benefits,  and  their  most  equitable  dis- 
tribution. Moreover,  there  can  be  conceived  no 
greater  moral  stimulus  than  that  which  results  from 
the  daily  employment  of  each  citizen,  with  each  day's 
result  of  labor  possessed  and  held  in  a  sense  of 
security.  In  the  free  operation  of  these  incentives  it 
is  necessary  to  note  that  the  individual  is  the  chief 
object  of  nature's  solicitude  :  the  individual  as  a  unit 
distinguished  from  the  number.  Inherent  in  these 
incentives  lies  the  vivid  recognition  of  the  equality 
of  right  of  each  of  these  units  before  the  law,  before 
the  popular  power,  and  before  any  power  exercised 
by  any  aggregation  or  delegation  of  the  units, 
whether  such  delegation  be  for  the  enlargement  of 
commercial  convenience  or  for  civil  and  industrial 
government.  The  unvarying  prerequisite  is  that  the 
power  must  be  exercised  for  the  equal  commercial 
convenience  and  for  the  equal  government  of  each 
one  of  the  units.  There  is  no  possible  place  for  the 
least  phase  of  favoritism  in  the  operation  of  this 
principle.  The  moment  a  political  privilege  of  any 
kind  is  created,  freedom  recedes  just  so  far  as  the 
privilege  operates.  The  highest  attribute  of  this 
political  freedom,  therefore,  is  that  it  is  an  equation, 
in  which  each  one  of  the  constituent  units  has  an 
exact  and  equal  quantum  of  political  right.  The 
incentives  of  acquisition  and  possession  which  thus 
belong  to  political  liberty  are  not  mere  incidents  or 
accidents ;  they  are  in  and  of  it  essentially,  and  by 


24  INDUSTRIAL   LIBERTY 

the  inlierent  obligation  of  nature ' ;  and  it  is  imma- 
nent in  tlie  wliole  law  of  this  liberty  that  no 
condition  can  be  engrafted  upon  that  la^v  to  change 
its  quality. 

Thus  Liberty  brings  her  gift  to  mankind,  not  in 
the  mass,  but  to  each  individual  man,  and  says : 

"  You  shall  have  the  free  use  of  your  faculties,  to 
make,  to  build,  to  get,  to  gather,  and  to  keep.  You 
shall  be  equal  to  all  others  before  my  law ;  not 
equal  in  faculty  or  endowment,  for  my  gift  to  you  is 
of  political  right,  not  of  natural  faculty.  Political 
freedom  does  not,  and  cannot,  confer  natural  faculty ; 

'  The  "  natural  rights"  of  man  is  a  subject  of  transcendent  importance 
and  one  which  has  been  clearly  set  forth  by  Herbert  Spencer.     He  says  : 

"  Says  Professor  Jevons,  in  his  work  '  The  State  in  Relation  to  Tabor  ' : 
'  The  first  step  must  be  to  rid  our  minds  of  the  idea  that  there  are  any  such 
things  in  social  matters  as  abstract  rights.'  Of  like  character  is  the  belief 
expressed  by  Mr.  Matthew  Arnold  in  his  article  on  copyright :  '  An  author 
has  no  natural  right  to  any  thing  whatever  which  he  may  produce  or  acqiiire.' 
So,  too,  I  recently  read  in  a  weekly  journal  of  high  repute,  that  '  to  explain 
once  more  that  there  is  no  such  thing  as  ' '  natural  right "  would  be  a  waste 
of  philosophy.'  And  the  view  expressed  in  these  extracts  is  commonly  ut- 
tered by  statesmen  and  lawyers  in  a  way  implying  that  only  the  unthinking 
masses  hold  any  other." 

"  One  might  have  expected  that  utterances  to  this  effect  would  have  been 
rendered  less  dogmatic  by  the  knowledge  that  a  whole  school  of  legists  on 
the  Continent  maintains  a  belief  diametrically  opposed  to  that  maintained 
by  the  English  school.  The  idea  of  Natur-recht  is  the  root  of  Ger- 
man jurisprudence.  Now  whatever  may  be  the  opinion  held  respecting 
German  philosophy  at  large,  it  cannot  be  characterized  as  shallow.  A  doc- 
trine current  among  a  people  distinguished  among  all  others  as  laborious 
inquirers,  and  certainly  not  to  be  classed  with  superficial  thinkers,  should 
not  be  dismissed  as  though  it  were  nothing  more  than  a  popular  delusion." 
******* 

"  '  So  early  as  the  fifteenth  century,'  says  Professor  Pollock,  '  we  find  a 
common-law  judge  declaring  that,  as  in  a  case  unprovided  for  by  known 
rules  the  civilians  and  canonists  devise  a  new  rule  according  to  '  the  law  of 


FUNDAMENTAL   IDEAS  2$ 

nor  can  it  change  the  variety  of  that  faculty.  I  take 
you  as  I  find  you,  with  those  faculties  which  nature 
has  thus  given  you  in  diversity.  I  would  not  change 
these  if  I  could ;  nor  would  I  disturb  their  diversity ; 
since  it  is  by  this  very  diversity  that  individuality 
receives  its  highest  expression,  and  that  the  largest 
results  of  my  gift  of  political  freedom  and  political 
equality  are  realized.  .  Bringing,  therefore,  to  me  the 
faculties  which  nature  has  given  you,  I  determine 
that  you  shall  employ  them  in  your  own  behalf,  in 

nature,  which  is  the  ground  of  all  laws,'  the  courts  of  Westminster  can  and 
will  do  the  like." 

Mr.  Spencer  then  considers  the  source  of  this  truth  as  depending  upon 
the  scientific  fact  that  there  can  be  no  social  phenomena  but  what,  if  we 
analyze  them  to  the  bottom,  bring  us  down  to  the  laws  of  biology,  of  life; 
and  that  there  can  be  no  true  understanding  of  them  without  reference  to 
the  laws  of  life.  He  then  goes  on  to  show  how  animal  life  involves  waste  ; 
how  waste  must  be  repaired  ;  how  repair  implies  nutrition  ;  how  nutrition 
supposes  obtainment  of  food  ;  how  food  can  only  be  gotten  through  powers 
of  prehension  and,  usually,  locomotion  ;  how,  in  order  to  achieve  these 
ends,  there  must  be  freedom  to  move  about.     He  then  proceeds  : 

"If  we  adopt  pessimism  as  a  creed,  and  with  it  accept  the  implication 
that  life  in  general  being  an  evil  should  be  put  an  end  to,  then  there  is  no 
ethical  warrant  for  these  actions  by  M'hich  life  is  maintained  :  the  whole 
question  drops.  But  if  we  adopt  either  the  optimist  view  or  the  meliorist 
view — if  we  say  that  life  on  the  whole  brings  more  pleasure  than  pain,  or  that 
it  is  on  the  way  to  become  such  that  it  will  yield  more  pleasure  than  pain, 
then  these  actions  by  which  life  is  maintained  are  justified,  and  there  re- 
sults a  warrant  for  the  freedom  to  perform  them.  Those  who  hold  that 
life  is  valuable,  hold,  by  implication,  that  men  ought  not  to  be  prevented 
from  carrj'ing  on  life-sustaining  activities.  In  other  words,  if  it  is  said  to 
be  '  right '  that  they  should  carry  them  on,  then,  by  permutation,  we  get 
the  assertion  that  they  '  have  a  right '  to  carry  them  on.  Clearly  the  con- 
ception of  '  natural  rights  '  originates  in  recognition  of  the  truth  that  if  life 
is  justifiable,  there  must  be  a  justification  for  the  performance  of  acts  es- 
sential to  its  preservation,  and,  therefore,  a  justification  for  those  liberties 
and  claims  which  make  such  acts  possible."  (.See  "  The  Man  versus  the 
State,"  p.  87  et  seq.) 


26  INDUSTRIAL   LIBERTY 

my  behalf,  aucl  iu  belialf  of  liumauity,  with  the  same 
freedom  as  that  with  which  every  other  man  may 
use  his.  You  may  bequeath  the  fruits  of  your 
endeavors,  within  the  limits  of  your  natural  affection, 
to  your  children  and  grandchildren.  This  you  may 
do  in  order  that  your  incentives  to  acquisition  and 
possession  may  be  complete.  Beyond  this  you  can- 
not tie  up  your  gains  to  be  held  against  the  incen- 
tives and  activities  of  the  generations  to  follow.  I 
confer  this  gift  upon  you,  upon  the  condition  that  you 
will  assist  every  other  unit  in  the  exercise  of  his  like 
political  gift,  and  that  you  will  not  permit  any  person 
or  combination  of  persons  to  exceed  the  common  limit. 
It  is  only  by  implicit  obedience  to  this  high  com- 
mand that  you  shall  keep  the  gift  unsullied.  En- 
deavor but  once  to  magnify  it  beyond  the  bounds  of 
another  unit's  gift,  and  the  endeavor  shall  be  meas- 
ured back  to  you  in  j^eualty.  You  may  delegate  a 
part  of  your  authority  to  other  units,  to  act  for  you 
as  legislators,  as  judges,  as  executives,  in  order  to 
keep  unimpaired  and  to  enforce  individual  political 
right.  You  may,  for  the  common  convenience,  per- 
mit commerce  and  industry  to  be  conducted  by  dele- 
gated units ;  but  you  must  see  to  it  that  j)aramount 
to  all  such  authority  is  the  supreme  equal  political 
right  of  the  individual  units,  the  sacred  thing  to 
which  all  other  things  must  be  adjusted;  and  that 
every  created  artifice  must  be  made  to  conform  to 
this ;  that  no  one  must  ever  in  the  least  degree 
interfere  with  or  obstruct  its  sanctity.     These  are 


FUNDAMENTAL  IDEAS  2/ 

the  inviolable  conditions  of  your  title  to  my  gift. 
You  cannot  alienate  this  title,  and  you  can  only 
bequeath  it  with  its  inexorable  conditions." 

It  has  become  the  habit  of  some  men,  who  have 
achieved  commercial  success  upon  violations  of  the 
simj)le  principles  of  political  liberty  here  indicated, 
to  treat  with  indifference  any  reference  to  these 
simple  principles.  The  subject  of  political  liberty 
is  to  them  an  outworn  platitude ;  the  Declaration 
an  archaism,  a  sounding  generality  that  may  serve 
well  enough  for  a  patriotic  celebration,  but  is  totally 
iinsuited  for  the  grave  and  practical  affau's  of  the 
rest  of  the  year.  But,  for  the  generation  from  which 
that  Declaration  sprung,  it  was  hallowed  by  priva- 
tions and  sacrifices.  Every  word  was  vibrant  with 
meaning,  and  it  exalted  their  spirits  like  new  wine. 
By  the  Constitution,  which  followed  it,  they  gauged 
the  affairs  of  their  daily  lives  ;  they  tested  their  re- 
lations to  each  other,  and  it  harmonized  and  simpli- 
fied these  relations.  Their  delegated  authorities 
enacted  statutes,  made  decisions,  and  executed  them, 
not  only  in  conformity  with  it,  but  ^vith  an  eye  single 
to  its  preservation  and  effect. 

And  now,  in  view  of  what  I  have  said,  let  us  look 
at  the  Declaration  of  Independence  and  the  Consti- 
tution of  our  country,  in  order  to  see  whether  we 
may  not  extract  from  them  that  precise  definition 
which  we  promised  ourselves  in  the  beginning. 
Probably  the  most  comprehensive  sentence  in  the 
Declaration  of  Independence  is  the  one  beginning 


28  INDUSTRIAL  LIBERTY 

"  All  men  are  created  equal," '  and  probably  the 
most  comprehensive  one  in  the  Constitution  is  that 
which  declares  that  no  law  shall  be  passed  in  any 
State,  and,  by  necessary  implication,  by  the  federa- 
tion of  States,  that  shall  impair  the  obligation  of 
contract.  Taken  together,  these  statements  furnish 
the  basis  for  a  comprehensive  and  precise  definition 
of  modern  industrial  liberty.  That  definition  may 
be  expressed  in  these  words : 

Industrial  liberty  consists  in  the  freedom  of  each 
individual  citizen,  guarded  by  such  delegated  author- 
ity, contributed  by  each,  as  is  necessary  to  ^preserve 
this  individual  freedom  equally  to  each  j  and  this 
liberty  includes  the  freedom  of  eacli  individual  citizen 
to  contract^  and  the  sanctity  of  contract. 

The  individual  is  thus  the  source  of  all  political 
power.  In  the  law  of  political  liberty,  therefore, 
there  is  a  power,  a  right,  and  a  duty ;  the  power  is 
paramount,  the  right  and  duty  inseverable  and 
fundamental.  To  the  individual  belongs  the  right ; 
it  is  secured  through  the  recognition  by  each  indi- 
vidual of  political  equality,  and  by  the  consensus 
of  individual  self-restraint.  The  duty  expressed 
in  self-restraint  makes  this  right  a  political  right, 
equal  and  complete.  Such  a  power  and  such  a  right 
can  properly  belong  to  no  class,  and  can  have  no 

'  I  fully  realize  this  to  be  out  of  accord  with  the  important  distinction  be- 
tween political  equality  and  the  assumption  of  social  or  iiitelleclual  equality, 
or  of  any  equality  among  the  human  faculties,  but  as  I  treat  of  this  distinc- 
tion more  in  detail  in  Chapter  IX.  I  do  not  consider  it  necessary  to  dwell 
upon  it  here. 


FUNDAMENTAL   IDEAS  29 

hereditary  character,  and  caunot  be  expressed  ex- 
cept by  recognition  of  its  equality.  These  are  the 
bounds  of  political  and  industrial  liberty,  and  they 
cannot  be  added  to  or  diminished. 

As  I  have  already  intimated,  the  Constitution 
went  within  one  step  of  providing  for  this  ultimate. 
Let  me  briefly  indicate  the  manner  in  which  this  was 
done.  The  powers  which  were  expressly  delegated 
by  the  States  to  the  Federal  Government  were  all  of 
a  character  which  tended  to  support  the  sovereignty 
of  each  one  of  the  States  alike.  Indeed  this  is  the 
larger  purpose  of  these  powers.  I  need  not  recite 
them  in  detail,  but  will  give  one  of  them  in  illustra- 
tion. The  Federal  power  to  regulate  commerce  be- 
tween States  tends  to  support  the  autonomy  of  all 
the  States.  Such  delegated  power,  exercised  within 
the  limits  of  the  grant,  cannot  have  a  centralizing 
tendency.  Its  influence  is  towards  diffusion,  because 
its  essential  function  is  to  hold  the  States  in  co- 
equal sovereignty  by  an  harmonious  adjustment  of 
their  powers.  In  this  view,  the  denial  by  the  Federal 
power  of  any  right  in  a  State  to  withdraw  from  the 
associated  sovereignty  is  not  an  act  which  implies 
concentration.  It  is  the  exertion  of  an  influence  for 
diffusion.  It  is  in  effect  a  denial  by  the  holder  in 
trust  of  the  title-papers  of  the  sovereignty  of  all  the 
States,  that  there  could  exist  in  any  one  State  the 
right  to  mar  the  associated  sovereignty  in  which  each 
State  has  an  equal  and  inalienable  interest.  The  Civil 
War  was  thouo^ht  to  have  chans^ed  this  relation.     It 


30  INDUSTRIAL   LIBERTY 

was  believed  by  many  that  tlie  act  of  war  by  tlie 
Federal  Government  against  tlie  seceding  States  was 
in  itself  a  breach,  of  this  sovereignty, — a  breaking 
down  of  the  autonomy  of  the  States.  But  the  op- 
posite of  this  has  been  classically  illustrated  by  the 
consequences ;  for  wh.en  after  the  war  the  Federal 
Government  finally  restored  the  autonomy  to  the 
Southern  States,  that  act  was  unique  in  history,  and 
it  constituted  the  highest  possible  declaration  of  the 
principle  of  State  sovereignty  under  the  Constitution. 
Inherent,  then,  in  this  institution,  made  by  the 
framers  of  the  Constitution,  there  is  the  quality  of  a 
compact  whereby  power  is  conferred  upon  the  fed- 
eration to  enable  it  to  keep  that  compact  inviolable, 
not  only  not  to  trench  upon  it  itself,  but  also  not  to 
permit  it  to  be  trenched  upon.  The  custodian  of 
that  compact  is  thus  the  holder  of  the  scales  of 
sovereignty.  In  accordance  \Yith  this  view,  the 
amendments  to  the  Constitution  which  have  been 
engrafted  on  it  since  the  war  cannot  be  construed  as 
seriously  mai'ring  the  autonomy  of  the  States.  Mr. 
Justice  Miller  has  lately  expressed  himself  to  this 
effect  upon  these  amendments.  He  treats  the 
amendments  as  exceptions  to  the  rule;  but  if  the 
theory  which  I  have  advocated  is  correct,  they  are 
not  so  much  exceptions  as  instances  of  diffused 
sovereignty.  Nevertheless,  he  concludes  that  the 
sovereignty  of  the  States  is  unaffected  by  the  legisla- 
tion duiing  and  since  the  war.     He  says : 

"  It  may  be  considered  now  as  settled  that,  with  the  ex- 


FUNDAMENTAL  IDEAS  31 

ception  of  the  specific  provisions  in  them  for  the  protec- 
tion of  the  personal  riglits  of  the  citizens  and  people  of 
the  United  States,  and  the  necessary  restrictions  upon 
the  power  of  the  States  for  that  purpose,  with  the  addi- 
tions to  the  powers  of  the  general  government  to  enforce 
those  provisions,  no  substantial  change  has  been  made. 
The  necessity  of  the  great  powers  conceded  by  the  Con- 
stitution originally  to  the  Federal  Government,  and  the 
equal  necessity  of  the  autonomy  of  the  States  and  their 
power  to  regulate  their  own  domestic  affairs,  remain  as 
the  great  features  of  our  complex  form  of  government."  ' 

Indeed  the  only  act  within  my  knowledge  which 
tends  seriously  to  impair  the  sovereignty  of  the 
State,  by  assuming  for  the  Federal  Grovernment  a  new 
kind  of  sovereignty,  is  to  be  found  in  the  decision  of 
the  Supreme  Court  of  the  United  States  in  the  case 
of  Juilliard  va.  Greenman,  on  the  subject  of  legal 
tender.^  This,  in  my  opinion,  as  I  shall  hereafter 
endeavor  to  show,  has  done  the  greatest  violence,  not 
only  to  the  sovereignty  of  the  States^  but  to  a  funda- 
mental individual  right — the  sanctity  of  contract. 

It  will  thus  be  seen  that  the  establishment  of  the 
inter-autonomy  of  the  States  for  the  preservation  of 
liberty  was,  as  I  have  said,  the  extent  to  which  the 
framers  of  the  Constitution  went.  The  idea  of  the 
supremacy  of  individuality,  as  it  is  understood  to- 
day, was  not  then  realized,  nor  perhaps  would  such 
an  idea  have  then  been    entertained.     Indeed,  the 

'  Address  to  the   Law  Alumni  of  Michigan  University,  by  Mr.  Justice 
Samuel  F.  Miller,  of  the  United  Stales  Supreme  Court,  1887. 
-  U.  S.  Supreme  Court  Reports,  no,  p.  42. 


32  INDUSTRIAL   LIBERTY 

distrust  of  a  simple  republicau  government  was  then 
more  generally  felt  than  can  now  be  easily  realized. 
The  disbelief  in  the  capacity  of  the  individual  was 
quite  a  common  fear  at  the  time  of  the  formation  of 
the  Constitution.  Madison,  who  was  called  "  the 
Father  of  the  Constitution,"  shared  it.  Washington 
shared  it.  Hamilton  was  possessed  by  it.  His 
leanings  were  all  in  favor  of  a  constitutional  monarchy. 
In  the  Convention  he  says :  "  I  acknowledge  I  do 
not  think  favorably  of  republican  government.  .  .  . 
Real  liberty  is  neither  found  in  despotism  nor  in  the 
extremes  of  democracy,  but  in  moderate  govern- 
ment." '  Jefferson  almost  alone  had  no  sympathy 
with  the  fear,  but  he  was  absent  as  a  repi-esentative 
of  the  government  in  France  during  the  whole  time 
of  the  formation  of  the  Constitution.  Nevertheless, 
it  was  largely  from  the  fact  that  his  confidence  pre- 
vailed in  the  policy  which  followed,  that  the  confi- 
dence in  the  people  for  self-government  came  at  last 
to  prevail. 

I  do  not  mean  to  say  that  no  idea  of  individuality 
was  entertained  during  the  discussions  that  took 
place.  The  term  is  indeed  often  used,  but  always  as 
implying  one  of  a  multitude,  and  generally  in  the 
discussion  of  the  relation  between  the  peoples  of  the 
States  and  the  people  of  the  Federal  Government ; 
never  with  reference  to  the  ultimate  individual  right. 
The  idea  was  not  then  entertained  that  in  a  real  re- 
public the  individual  unit  must  of  necessity  be  the 

'  Yates  in  Elliot,  I.  450. 


FUNDAMENTAL   IDEAS  33 

ultimate  repository  of  power  and  right.  It  was  not 
fully  realized  that  the  delegation  of  a  power  from  a 
number  of  units  cannot  take  to  itself  any  extraneous 
quality  by  the  addition ;  that  no  divine  right  can 
attach  to  a  power  by  delegation  from  human 
beings;  that  there  exists  in  this  delegated  power 
only  and  simply  the  agglomeration  of  individual 
sovereignties;  that  the  sole  reason  for  being  of 
the  delegated  power  is  to  keep  inviolate  and  sepa- 
rate the  source  of  all  power,  which  is  the  individual 
sovereignty,  to  preserve  this  foundation  of  power 
and  right  from  the  encroachment  of  every  other 
individual  sovereign  ;  and  that  thus  the  delegation  of 
all  power  in  a  republic  exists  solely  to  keep  the  in- 
dividual sovereignties  equal,  and  to  hold  them  in 
poise,  just  as  the  secondary  autonomy  of  the  States 
is  held  in  poise  by  the  delegated  power  given  to  the 
Federal  Government.  Any  idea,  therefore,  of  the 
federation  of  the  States,  and  of  the  people  of  the 
States  in  their  collective  capacity,  as  being  secondary 
adjuncts  for  the  preservation  of  individual  sover- 
eignty, was  not  conceived.  Nevertheless,  the  Con- 
stitution as  it  was  made  is  in  harmony  with  this  view 
of  individual  sovereignty ;  and  the  sovereignty  of 
the  States  constitutes  the  incidental  machinery  for 
the  support  of  the  sovereignty  of  the  individual. 
This  individual  sovereignty  thus  exists  as  a  neces- 
sity, as  an  essential  to  the  complete  idea  of  repub- 
licanism, for  the  reason  that  there  is  not  and  cannot 
be  in  any  republic  any  right  to  govern  on  account  of 


34  INDUSTRIAL   LIBERTY 

hereditary  privilege  or  class  distinction.  All  other 
rights  to  govern  being  thus  eliminated,  there  is  left 
only  the  ultimate  individual  autonomy — the  equal 
repositoiy  of  power — the  source  from  which  all  power 
in  a  republic  must  come  ;  and  this  being  the  ultimate, 
it  is  the  most  important.  It  is  for  the  preservation 
of  this  that  all  institutions  of  government  in  a  re- 
public must  be  erected. 

The  reluctance  to  accept  this  conclusion  ^vith  its 
full  import,  or  rather  the  slowness  by  which  we  are 
approaching  this  larger  conception  of  political  liberty, 
is  due  partly  to  the  difficulty  which  we  have  in  di- 
vesting our  minds  of  the  notion  that  there  must  be, 
somewhere,  some  who  are  created  to  rule  others  by 
an  hereditary  or  other  light,  and  partly  to  the  fears 
which  we  entertain  of  the  capacity  of  the  individual 
for  self-government — fears  which  are  inspired  by  the 
precedent  instability  of  ancient  democracies  and  by 
a  distrust  born  of  the  examples  of  individuality 
which  the  continent  of  Europe  furnishes,  and  which 
express  themselves  in  socialism,  communism,  and 
nihilism.  But  the  idea  of  a  class  or  hereditary  gov- 
ernment is  a  figment  of  the  divine  right  of  kings, 
since  there  is  no  point  between  divine  right  and  an 
unqualified  recognition  of  the  individual,  that  has 
not  some  degree  of  a  divine  or  some  other  mysterious 
assumption  in  it.  The  instability  of  the  democracies 
of  history  affords  no  ground  for  such  conclusion, 
since  there  is  not  the  least  analogy  between  the 
ancient  and  modern  types.     The   former  is   based 


FUNDAMENTAL   IDEAS  35 

upon  inilitancy;  the  latter  is  based  upon  industrial- 
ism ;  and  in  the  progress  of  civilization  the  industrial 
conditions  are  overcoming  the  militant.  They  are 
essentially  opposite  and  can  afford  no  ground  for 
comparison.  The  license  mistaken  foi*  liberty  in 
continental  Europe,  arises  from  the  important  fact 
that  the  individual  fibre,  habits,  and  training  of  the 
continental  unit  are  entirely  different  from  those  of 
the  Anglo-Saxon,  with  which  we  have  to  deal.  And 
beside  all  this,  if  we  are  to  have  a  republic,  we  can- 
not have  a  class  government,  since  that  is  essentially 
other  than  a  republic.  In  a  fully  developed  repub- 
lic, therefore,  we  must  have  the  individual  as  para- 
mount, because  there  is  no  place  else  for  the  ultimate 
power  to  rest.  Although  the  fathers  of  the  republic 
did  not,  as  I  have  said,  entirely  realize,  and  there- 
fore did  not  specifically  provide  for  this  fuller  devel- 
opment, yet  the  complex  system  which  they  did 
devise  secures  diffusion  of  power  by  the  sovereignty 
of  the  States,  and  constitutes  a  system  which  is  en- 
tirely in  accordance  with  the  later  development,  and 
sufficient  to  support  it. 

To  recapitulate  briefly.  There  exists  this  differ- 
ence between  the  liberty  indicated  by  the  Declara- 
tion of  Independence  and  the  Constitution,  and  that 
political  liberty  which  is  here  defined.  In  the 
former,  political  liberty  is  concei\'ed  as  belonging  to 
the  people  in  mass ;  the  latter  liberty  rests  upon 
the  individual  entity.  Individual  political  liberty 
depends  essentially  upon  the  duty  which  lies  behind 


6  INDUSTRIAL  LIBERTY 


it — the  duty  of  individual  self-restraint  and  the  recog- 
nition of  tlie  equal  j^olitical  right  of  every  other  in- 
dividual,— and  it  is  to  secure  the  performance  of  this 
duty  that  the  delegated  authority  is  created.  The 
Declaration  sets  forth  that  all  men  are  equal.  The 
ultimate  definition  above  given  indicates  that  each 
individual  has  all  the  essentials  of  political  sover- 
eignty in  himself,  and  that  upon  the  preservation  of 
the  integrity  of  this  sovereignty  the  preservation  of 
all  political  eqiiality  depends.  In  this  view,  the 
guard  to  political  liberty,  by  tlie  contribution  to 
delegated  authority,  is  not  a  limitation,  but  an  am- 
plification. The  continuance  of  American  freedom 
depends  upon  the  character  and  vitality  of  the  Anglo- 
Saxon  unit  and  the  power  of  the  aggregate  of  Anglo- 
Saxon  units  to  adapt  each  new  physical  force,  as  it 
comes  into  use,  and  also  to  assimilate  all  other  units 
which  come  in  contact  with  it,  for  the  highest 
preservation  of  the  political  and  industrial  vitality 
of  the  individual  unit. 

In  view  of  the  tendency  of  the  mechanical  power 
of  modern  civilization,  and  of  the  corporate  power, 
towards  the  creation  of  class  power  and  towards  cen- 
tralization ;  in  view  also  of  the  reflex  tendencies  arising 
from  these,  towards  socialism,  agrarianism,  commun- 
ism— all  of  which  are  interferences  with  the  sanctity 
of  individual  political  liberty  and  with  those  dif- 
fused incentives  upon  which  this  sanctity  and  lib- 
erty depend, — it  becomes  necessary  that  tlie  true 
bounds  of  industrial  liberty  be  clearly  understood. 


FUNDAMENTAL   IDEAS  3/ 

Under  tlie  law  of  industrial  liberty,  as  I  Lave 
heretofore  defined  it,  these  incentives  for  tlie  acqui- 
sition of  property  and  tlie  security  of  its  possession 
will  be  diffused,  and  the  sanctity  of  contract  will  be 
established  for  every  delegation  or  aggregation  of 
individuals.  AVith  the  principle  thus  established, 
every  corporation  or  association,  whether  political  or 
commercial,  which  is  public  or  ^^^^as^'-public,  mil 
exist  for  service  to  every  individual  by  an  equal  rule ; 
and  under  this  law,  in  its  relation  to  individual  con- 
tract, every  individual  may  contract  with  every 
other  individual  who  is  willing  to  contract  for  a 
lawful  purpose,  without  any  restraint  whatever ;  and 
all  contracts  made  in  accordance  A\dth  this  principle 
shall  be  binding.  Thus,  under  the  operation  of  this 
law,  it  will  be  found  that  such  interference  with  con- 
tract as  railway  discrimination  cannot  exist ;  nor  can 
such  other  interference  with  private  contract  be- 
tween employer  and  employed  as  the  Knights  of 
Labor  propose  to  establish  be  tolerated.  I  will 
illustrate  this  more  fully  hereafter. 

The  definition  is  of  universal  application.  It 
furnishes  the  archetype  of  industrial  liberty.  It 
affords  a  formula  for  every  case  that  any  complica- 
tion of  circumstances  can  produce — a  standard 
whereby  we  may  exactly  determine  any  variation 
from  its  limits. 

It  is  undoubtedly  true  that  the  highest  degree  of 
individual  political  liberty  thus  defined  is  not  only 
not  now  realized,  but  that  it  is  far  from  present 

82885 


38  INDUSTRIAL   LTBRRrY 

realization.  Even  the  Anglo-Saxon  unit,  wliicli  is  per- 
haps the  best,  is,  as  a  matter  of  fact,  not  yet  impressed 
with  a  recpiisite  sense  of  its  importance  and  of  the 
self-restraint  that  is  needed  to  secure  the  accomplish- 
ment of  any  thing  like  this  degree  of  freedom.  Under 
the  most  favorable  circumstances  a  lono;  time  will 
perhaps  elapse  before  we  can  enjoy  such  an  equi- 
librium. At  present  we  have  the  expression  of  this 
individuality  by  means  of  the  majority ;  but  a  ma- 
jority is  by  no  means  a  perfect  expression  of  the  con- 
sensus of  the  individual  factors.  It  may  be,  and 
sometimes  is,  tyrannical ;  as  negligent  of  the  indi- 
vidual right  or  of  the  minority  as  an  autocrat  may 
be,  although  not  as  likely  to  be  so  constant,  since 
the  shifting  element  which  moves  between  party  and 
party  operates  wholesomely  against  the  continuance 
of  extremes.  But  a  majority,  at  best  an  uncertain 
power,  is  under  present  conditions  the  only  vehicle 
we  have.  While  some  efforts  have  been  made  and 
are  making  to  improve  upon  its  office,  these  efforts 
have  as  yet  not  been  signally  successful.  When  I 
note  the  sum  of  all  the  tendencies  of  civilization,  I 
believe  there  is  reason  for  hope  in  this  direction — for 
hope  that  we  are  gradually  but  slowly  moving,  to- 
ward the  realization  of  larger  political  liberty.  If 
we  can  ever  arrive  at  the  stag^e  where  the  averas-e 
man  will  be  a  man  who  clearly  sees  that  through  in- 
direct as  well  as  direct  consequences  his  own  largest 
social,  intellectual,  physical,  and  moral  power  and 
right  rest  upon  the  recognition  of  precisely  the  same 


FUNDAMENTAL  IDEAS  39 

things  in  others ;  if  it  is  not  too  much  to  hope  that 
the  growth  of  intelligence  will  at  last  bear  the  ma- 
jority to  this  point,  then  we  may  entertain  the  con- 
fidence of  its  ultimate  accomplishment.  The  typical 
man  then,  representing  the  majority,  will  see  in  the 
largest  political  freedom — the  equal  freedom — a 
larger  right  to  himself  in  justice  than  in  aggression, 
a  more  secure  tenure  in  the  exact  recofjnition  of  the 
law  of  tenure  than  in  its  violation,  and  vested  in- 
terests standing  upon  the  permanent  basis  of  right. 
I  conceive  this  to  be  a  possibility  lying  somewhere 
on  the  line  of  future  civilization.  Between  our  pres- 
ent state  and  its  accomplishment  there  is  the  ne- 
cessity, doubtless,  of  a  large  increase  in  the  average 
of  human  intelligence,  and  there  will  be,  in  our  prog- 
ress to  it,  lapses  as  well  as  advances.  In  the  past 
eighteen  hundred  years,  taking  all  in  all,  there  has 
been  a  growth,  gradual  it  is  true,  but  with  considera- 
ble persistency,  and  a  growth  in  this  direction.  And 
it  is  this  fact  that  affords  substantial  reason  for  the 
continuance  of  this  growth  until  we  shall  reach  the 
point  upon  the  line  where  this  consummation  lies. 
But  however  this  may  be,  all  that  we  need  ask  for 
the  purpose  of  the  present  examination  is  whether 
the  definition  which  I  have  given  is  true.  If  it  be 
true,  if  it  sets  forth  a  sound  principle,  then  ~we  may 
make  it  such  a  standard  as  I  have  indicated  for 
measuring  not  only  those  departures  from  the  prin- 
ciples which  exist  in  the  industrial  conditions  about 
us,  but  also  for  measuring  the  qualities  of  all  the 


40  INDUSTRIAL   LIBERTY 

reforms  whicli  are  proposed  concerning  those  condi- 
tions ;  and  when  we  use  it  for  reducing  to  simplicity 
those  confusions  which  come  from  the  too  close  con- 
sideration of  multiplied  and  complex  results,  we  will 
come  to  see  with  more  clearness  the  force  and  appli- 
cation of  those  "  middle  principles  "  which  underlie 
the  whole  subject. 


CHAPTER  II 

THE    INFLUENCE    OF    THE   DISCOVERY    OF    STEAM    AND 
TUE    aiECHANICAL    INVENTIONS    UPON    INDUSTRY 

Edmund  Burke,  in  1790,  pronounced  a  eulogy 
upon  the  age  of  chivalry  in  these  words  : 

"  The  age  of  chivalry  is  gone  ;  that  of  sophisters,  econ- 
omists, and  calculators  has  succeeded,  and  the  glory  of 
Europe  is  extinguished  forever.  Never,  never  more  shall 
we  behold  that  generous  loyalty  to  rank  and  sex,  that 
proud  submission,  that  dignified  obedience,  that  subordi- 
nation of  heart  which  kept  alive,  even  in  servitude  itself, 
the  spirit  of  exalted  freedom."  ' 

In  a  vein  just  the  opposite  of  that  in  which  these 
sentiments  were  conceived,  Burke  had  long  before 
held  up  the  prime  necessity  of  compliance  with  the 
order  of  natui-e  as  being  paramount,  in  order  to 
sustain 

"  those  unalterable  relations  which  Providence  has  or- 
dained that  every  thing  should  bear  to  every  other.  These 
relations,  which  are  truth  itself,  the  foundation  of  virtue, 
and  consequently  the  only  measures  of  happiness,  should 
be  likewise  the  only  measures  by  which  we  should  direct 
our    reasoning.     To   these   we  should   conform    in    good 

'  "  Reflections  on  the  Revolution  in  France."     London,  1790,  p.  1 13. 

41 


42  INDUSTRIAL  LIBERTY 

earnest,  and  not  think  to  force  nature,  and  the  whole 
order  of  her-  system,  by  a  compHance  with  our  pride  and 
folly,  to  conform  to  our  artificial  regulations.  It  is  by 
a  conformity  to  this  method  we  owe  the  discovery  of  the 
few  truths  we  know,  and  the  little  liberiy  and  rational 
happiness  we  enjoy."  ' 

I  place  these  extracts  side  by  side  in  contrast,  iu 
order  to  slio^\'  liow  far  tlie  foremost  statesman  of  Ms 
age  was  from  realizing  tlie  immense  transitions  wliicli 
were  taking  place  about  him,  and  from  realizing  tlie 
necessity  of  more  than  ever  carefully  studying  and 
conforming,  "  in  good  earnest,"  to  tlie  necessities  of 
the  new  order  of  things  thus  inaugurated  b}^  indus- 
trial progress.  Coleridge  says  of  Burke  :  "  He  pos- 
sessed and  sedulously  sharpened  that  eye  which  sees 
all  things,  actions,  and  events  in  relation  to  the  laws 
which  determine  their  existence  and  circumscribe 
their  possibility.  He  referred  habitually  to  princi- 
ples, and  was  a  scientific  statesman."  The  condition 
of  aifairs  must  have  been  peculiar,  without  prece- 
dent, Avhich  could  cause  such  a  man  to  lose  his 
clearer  vision  of  the  underlying  princij)les  of  his 
surroundings,  to  indulge  in  sentimental  regrets  for 
the  past,  and  to  oppose  all  progress.  And  so,  in- 
deed, they  were.  The  French  Revolution,  with  all 
its  enormities,  stood  prominently  before  the  eyes  of 
all  the  English  statesmen  ;  and  not  only  gave  the 
severest  shock  to  the  sentiments  which  were  born  of 
the  romance  period,  but  threatened  the  foundations 

'Burke's   Works.      Boston,    1839.     Vol.    I.,    p.    9.       "Vindication   of 
Natural  Society." 


THE  DISCOVERY  OF    STEAM  43 

of  all  human  government.  These  statesmen  became 
more  than  profoundly  conservative,  and  sternly  set 
their  faces  against  every  innovation.  To  them  it 
was  conclusive  that,  because  the  spirit  of  change  had 
gone  so  far  and  so  violently  in  France,  it  was  there- 
fore not  to  be  allowed  to  take  its  first  step  in  Eng- 
land. To  them  the  only  safety  lay  in  the  sanctions 
of  the  past.  But  the  "  stream  of  tendency  "  had  set 
unalterably  against  chivalry  and  in  favor  of  industry, 
and  was  not  therefore  to  be  turned.  The  doom  of 
medieval  conditions,  although  not  yet  accomplished, 
was  sealed.  Chivalry  and  knighthood  had  nothing 
more  to  confer  upon  mankind,  nor  could  the  new 
spirit  of  the  age  accept  from  them  instruction  re- 
garding the  industrial  lessons  of  life,  any  more  than 
that  spirit  could  revive  within  itself  a  faith  in  witch- 
craft or  in  the  divine  right  of  kings.  Whatever 
virtues  may  be  conceded  to  the  chivalric  period, 
such  as  the  "  generous  loyalty  of  rank  and  sex,"  the 
"  proud  submission,"  and  the  "  dignified  obedience," 
it  could  not  be  claimed  that  the  "  spirit  of  exalted 
freedom  "  Avas  any  longer  to  be  kept  alive  "  in  servi- 
tude." Of  the  laws  of  commercial  obligation  and 
exact  justice,  the  cavalier  knew  little  and  cared  less. 
As  chivalry  impressed  upon  its  own  age  the  idea 
that  the  highest  sentiments  of  honor  were  com- 
patible with  the  lowest  sense  of  commercial  honesty, 
it  could  confer  nothing  upon  the  subject  of  indus- 
trial law  which  could  have  the  least  value  for  the 
incoming  age. 


44  INDUSTRIAL   LIBERTY 

Nevertheless,  although  the  decisive  change  was 
thus  in  progress,  it  was  more  than  half  a  century 
before  this  time  that  the  contest  had  really  begun 
between  the  industrial  and  the  lauded  interest.  The 
Landed  Property  Qualification  Act  was  passed  in 
1712.  It  was  intended  to  assert  the  principle  of 
the  larger  right  of  the  landholder  in  the  manage- 
ment of  the  government.  This  act  was  elicited  by 
the  manifest  fact  that,  in  the  reign  of  Queen  Anne, 
already  the  moneyed  interest  was  tending  to  super- 
sede the  landed  interest.  "  Power,"  as  Swift  said, 
"  which,  according  to  an  old  maxim,  w^as  used  to  fol- 
low land,  is  now  gone  over  to  money."  ^  It  was  a 
fundamental  maxim  of  the  Tory  party  at  that  time, 
that  "  law  in  a  free  country  is,  or  ought  to  be,  the 
determination  of  a  majority  of  those  who  have  prop- 
erty in  land  "  ^ ;  that  "  the  right  strength  of  this 
kingdom  depends  upon  the  land,  which  is  infinitely 
superior,  and  ought  much  more  to  be  regaicled, 
than  our  concerns  in  trade."  ^  It  has  been  truly  said 
of  England  that  "  the  country  represents  all  the  ele- 
ments of  conservatism  and  tradition,  whilst  with  the 
commercial  centres  were  all  the  elements  of  pro- 
gress." 3  But  England  as  a  "  pasture  ground  "  was  no 
more.  The  new  Eno-land  was  thenceforth  to  be  a 
land  of  manufacture  and  a  centre  of  foreign  com- 
merce. The  inventions  of  spinning  and  weaving,  the 
discoveries  of  coal  and  iron  in  the  north,  which  con- 

'  "England  in  the  Eighteenth  Century,"  W.  E.  II.  Lecky,  New  York, 
1878,  vol.  I.  p.  217.  '^  Id.,  p.  217.  ^  Id.,  p.  202. 


THE   DISCOVERY  OF    STEAM  45 

verted  tlie  most  sterile  parts  of  the  country  into  the 
richest,  were  soon  thereafter  to  be  supplemented  by 
the  discovery  of  steam,  which  was  to  promote  and 
enlarge  the  industrial  change  until  it  should  become 
the  greatest  change  in  all  history. 

No  such  social  cataclysm,  however,  as  that  whick 
the  later  inventions  have  brought  about,  was  or 
could  have  been  dreamed  of  then.  This  in  the 
order  of  things  was  to  come  later.  Indeed,  although 
in  the  progress  of  Western  civilization  this  industrial 
spirit  had  steadily  gained  ground  in  its  contest  with 
the  military  spirit,  the  contest  proceeded  at  first  by 
very  gradual  stages,  so  that  the  achievements  were 
easily  appropriated  by  civilization.  The  first  great 
decisive  act  of  legislation  which  marked  the  new  era 
was  the  repeal  of  the  Corn  Laws.  Even  when  the 
inventions  born  of  steam  and  electricity,  and  the 
other  immediate  sequeloe,  were  "marshalled  in  the 
wage  "  to  make  the  victory  permanent,  the  progress 
continued  deliberate  for  a  long  time  after  ;  and  it  is 
only  within  the  past  twenty-five  years  that  the 
supremacy  of  industrial  methods  has  with  a  certain 
suddeness  become  overwhelming.  While  the  atten- 
tion of  mankind  was  closely  directed  to  the  products 
of  steam,  especially  in  the  development  of  railway 
locomotion,  there  was  a  signal  failure  to  appreciate 
two  features  which  are  now  becoming  the  most 
prominent  of  the  whole  development.  The  first  of 
these  is  the  anomalous  relationship  of  these  activities 
to  the  State,  which  was  scarcely  at  fij-st  even  fore- 


46  INDUSTRIAL   LIBERTY 

shadowed  by  tliinkers  and  observers ;  and  tlie  second, 
tlie  inadequate  conception  of  tlie  magnitude  of  tlie 
effects  of  steam  upon  all  the  conditions  of  life.  The 
new  material  powers,  as  if  conscious,  overleaped  all 
bounds.  In  one  point  of  view  the  victorious  in- 
dustry preserves  some  of  the  methods  of  the  old 
militant  force,  since  some  of  the  means  by  which  it 
exerts  itself  are  of  the  militant  kind.  It  is  as  if  a 
victorious  army,  having  overcome  a  tyrant  in  behalf  of 
freedom,  should  refuse  thereafter  to  submit  to  the  law 
of  freedom,  and  become  a  tyrant  itself.  Modern  in- 
vention has  thus,  at  first  view,  almost  the  aspect  of  a 
paradox.  It  is  the  most  potent  engine  for  the  prog- 
ress of  civilization,  and,  at  the  same  time,  the  most 
severe  strain  upon  the  high  sanctities  of  tliat  civiliza- 
tion. It  advances  industrial  growth  and  the  mate- 
rial comforts  of  mankind,  while  it  insidiously  tres- 
passes upon  the  bounds  of  political  right.  It  in- 
creases the  means  of  subsistence,  and  mechanically 
diffuses  these  means  ;  but  the  processes  by  which  it 
does  this  tend  toward  the  centralization  of  political 
power  and  against  the  diffusion  of  political  liberty. 

The  application  of  steam  and  electricity  have  thus 
lately  assumed  such  stupendous  proportions,  and 
such  magnificent  variety,  and  have  brought  with 
them  such  vast  material  convenience,  t]iat  they  have 
tended  to  lead  captive  the  Judgment  and  bewilder 
the  imagination.  To  many  minds  it  seems  as  if 
those  established  principles  of  industry  and  econom- 
ics which  have  proven  sufficient  for  the  simpler  re- 


THE  DISCOVERY    OF    STEAM  47 

lations  of  life,  as  they  have  hitherto  existed,  have 
become  altogether  inadequate  for  the  regulation  of 
the  new  and  complex  conditions.  Even  some  of  our 
reformers  fall  under  the  glamour  of  these  immediate 
results.  So  much  is  so  readily  accomplished,  al- 
though in  ignorance  and  defiance  of  economic  law, 
that  they  are  prone  to  accej^t  the  fact  of  easy  accom- 
plishment as  a  warrant  for  the  defiance.  There  are 
those  who  honestly  believe  that  the  natural  laws  of 
competition  are  no  longer  in  existence,  because  rail- 
way managers  have  succeeded  in  disregarding  them ; 
as  when,  for  instance,  these  managers  engage  in  de- 
structive competition  between  commercial  centres, 
persisting  in  this  competition  even  to  the  loss  of  all 
profit,  and  afterwards  recouping  their  losses  by  the 
use  of  their  power  in  exacting  tribute  from  their 
local  patrons.  But  those  who  reason  in  this  way 
need  not  go  far  in  their  process  of  ratiocination  to 
conclude  that  all  natural  law  is  Avithout  sanction.  It 
does  not  always  occur  to  them  that,  as  in  the  instance 
which  I  have  given,  the  act  which  overcomes  the 
principle  of  competition  is  an  artificial  act — an  inter- 
ference with  a  natural  law, — and  being  so,  while  it 
may  obstruct  it,  it  cannot  annihilate  the  law.  AVhole- 
some  competition  remains  the  law  of  normal  trade, 
notwithstanding  such  wholesale  efforts  at  ignoring 
it.  The  railway  manager  is  not  endowed  with  super- 
natural power.  He  cannot  make  a  thousand  miles 
less  than  one  hundred  because  he  persists  in  char- 
ging less  for  what  is  called  the  "  long  haul "  than  for 


48  INDUSTRIAL   LIBERTY 

tbe  "■  sliort  haul."  But  the  theorist,  \vithout  reason- 
ing, assumes  that  he  can ;  and  it  is  from  this  class, 
by  no  means  a  small  one,  that  false  theory  receives 
both  construction  and  recognition. 

The  universality  of  the  influence  of  steam  and 
electricity  upon  international  relations  is  not  the  least 
instructive  feature  of  its  development.  AVlien  we 
consider  the  laborious  care  with  which  the  English 
estate  and  its  noble  appendages  have  been  guarded 
by  rigid  feudal  tenure,  through  ages,  against  the  en- 
croachments of  time,  the  vagaries  of  youth,  and  the 
assaults  of  discontent,  it  becomes  astonishing  to  note 
how  these  sanctions  have  been  influenced  within  the 
last  ten  years ;  how^  the  indirect  effects,  coming  from 
causes  operating  at  great  distances,  are  gradually 
tending  to  level  the  class  distinctions,  to  modify  the 
entailments  and  perpetuities  of  the  Common  Law,  and 
how  they  are  undermining  all  the  old  traditions. 
The  low-priced  products  of  the  western  prairies  of 
America  are  wearing  away,  as  inexorably  as  geo- 
logical erosions,  the  incomes  of  the  English  landlord's 
estate.  The  more  intimate  international  relation, 
proceeding  from  more  intimate  personal  intercourse, 
promotes  the  spread  of  democratic  ideas  among  the 
people.  The  Irish  question,  involving  an  attack 
upon  primogeniture,  hereditary  holding,  absenteeism, 
and  all  the  accompaniments  of  class  interests,  has 
thus  its  true  genesis  in  steam  and  electricity.  Never- 
theless, the  progress  of  this  industry  has  been  more 
deliberate  in  Europe  than  in  America.     This  has 


THE  DISCOVERY    OF  STEAM  49 

been  largely  due  to  the  strength  of  tradition  and  the 
countervailing  force  of  hereditary  interests.  But  the 
greater  activity  in  this  country  comes  not  alone  from 
the  comparative  freedom  from  these  restraints,  but 
also  from  the  larger  stimulus  ^vhich  has  been  given 
in  America  by  the  eagerness  of  the  citizens  to  de- 
velop a  new  country,  by  the  disposition  of  the  gov- 
ernment to  extend  public  aid  and  credit  in  further- 
ance of  this  object,  and  by  the  favorable  conditions 
of  the  country,  such  as  the  fertility  of  the  prairies, 
the  vast  extent  of  virgin  soil,  and  the  resources 
coming  from  variety  of  climate. 

In  thus  considerino;  the  difference  in  the  influences 
of  modern  industry  upon  different  political  institu- 
tions, we  observe  something  like  an  anomaly.  In  En- 
gland the  expansion  of  manufacturing  energy  is  tend- 
ing manifestly  towards  democratic  results ;  whilst  in 
America,  where  democracy  is  already  assumed  to  have 
a  fuller  form  under  law,  the  tendency  hitherto  is  rather 
towards  an  interference  with  democratic  sanctions.  If 
the  freedom  which  the  fundamental  law  of  America 
aims  to  establish  had  been  rigorously  guarded  from 
the  beginning,  with  a  vivid  jealousy  to  protect  this 
freedom  above  all  things  by  the  strict  adjustment  of 
all  industries  to  the  institutions,  whilst,  doubtless, 
the  eagerness  for  rapid  material  advancement  might 
not  have  been  so  largely  satisfied,  the  country  would 
have  been  enabled  more  fully  to  appropriate  for  the 
furthering  of  equal  political  right  all  the  great  uses 
which  steam  and  electricity  have  thrown  upon  us. 


$0  INDUSTRIAL   LIBERTY 

Thus,  whilst  the  results  would  have  been  more  de- 
liberate, they  certainly  ^vould  have  been  more  nor- 
mal and  more  permanent.  It  is  from  the  very  care- 
lessness with  which  our  freedom  is  held,  coupled 
with  our  great  anxiety  for  rapid  physical  advance- 
ment, that  monopolies  and  methods  at  variance  with 
the  democratic  idea  have  found  their  largest  oppor- 
tunity with  us.  The  too  easy  generosity  with  which 
vast  domains  of  public  land  have  been  conferred  has 
produced  a  concentration  of  corporate  power  thor- 
oughly hostile  to  the  furtherance  of  political  free- 
dom. Nevertheless,  as  I  will  presently  endeavor 
to  show,  this  condition  is  but  a  transitional  one,  and 
in  the  more  progressive  stages  the  guards  of  liberty 
are  yet  likely  to  be  sufficient  to  bring  all  the  ele- 
ments of  modern  civilization  under  control. 

Statistics  of  commercial,  material,  and  mechanical 
growth  abound.  They  come  upon  us  at  every  turn, 
and  seem  to  be  occup}dng  a  large  part  of  the  atten- 
tion of  the  world.  Hundreds,  probably  thousands, 
of  volumes  have  been  written  upon  the  subject  of 
steam  and  its  material  advantages,  setting  forth  how 
it  has  enlarged  our  medium  of  exchange,  our  means 
of  subsistence,  our  intercommunication ;  how  it  has 
redistributed  populations  and  thrown  all  the  activi- 
ties into  newer,  larger,  and  constantly  changing  re- 
lations with  each  other.  The  progress  of  railway 
development,  the  immense  revenues  from  industry, 
and  the  extent  of  new  territory,  developing  the 
population  of  new  areas,  constitute  one  of  the  chief 


THE  DISCOVERY    OF  STEAM  5 1 

topics  of  discussion  aud  the  wonderment  of  the  time. 
They  astonish  us  by  their  magnitude,  and  confuse 
us  by  their  variety  and  complexity.  But  these 
statistics  too  often  only  express  the  quantity,  and 
distract  our  attention  from  the  quality  and  the 
tendency  of  the  phenomena.  A  not  inconsiderable 
part  of  our  statistical  literature  is  devoted  to  ex- 
alting our  national  activity  and  inflating  our  national 
vanity.  Books  Avith  this  view  are  eagerly  sought 
and  generally  read ;  and  the  supply  of  them  seems 
to  be  less  than  the  demand,  for  their  number  is 
constantly  increasing.  Their  authors  generally  set 
forth  with  grandiloquent  rhetoric  the  immense  prog- 
ress of  America  under  democracy.  They  confuse 
political  equality  with  intellectual  and  social  equality. 
Their  views  of  patriotism  are  satisfied  by  the  indis- 
criminate abuse  of  every  other  country  and  form 
of  government ;  their  views  of  progress,  by  mere 
physical  development.  Statistics  of  magnitudes  are 
marshalled  in  abundance  to  prove  all  kinds  of  merit, 
and  are  especially  paraded  as  proofs  of  the  growth 
of  political  virtue.  But  vast  accumulation  is  not 
necessarily  national  well-being,  nor  indeed  even 
wholesome  wealth.  The  normal  commonwealth  best 
lives  by  diffusion  of  activity  and  wealth  ;  by  the  se- 
curity with  which  this  diffusion  is  maintained,  and 
by  the  sense  of  freedom  and  honesty  by  which  it  is 
governed.  A  slave  may  have  ten  thousand  dollars 
in  his  pocket,  and  a  freeman  may  have  nothing ;  but 
the  condition  of  the  freeman  is  the  better  of  the  two. 


S2  INDUSTRIAL   LIBERTY 

Tlie  highest  value  of  the  money  to  the  slave  is  its 
power  to  purchase  his  freedom.  If  it  cannot  do 
this,  both  man  and  money  belong  to  a  master.  It  is 
the  relation  of  the  individual  to  the  means  which 
constitutes  true  national  prosperity.  AVealth  is  only 
true  wealth  when  it  furnishes  this  well-beino!;  of 
society,  w^hen  it  tends  towards  freedom  and  man- 
hood. This  rule  lies  deeper  than  all  the  rules  of 
barter  or  the  addition  of  sums.  When  Gladstone 
and  Herbert  Spencer  indicate  for  us  a  favorable 
future,  based  only  upon  our  present  energy,  we 
must  not  be  too  ready  to  draw  the  inference  from 
their  courteous  prophecies,  that  all  the  methods 
which  we  have  adopted  in  promoting  our  industries 
are  virtuous.  We  permit  our  national  vanity  to  be 
stimulated  by  these  plausible  statistics  and  prophetic 
outgivings.  What  we  need  is  at  times  to  cease  ad- 
miring ourselves  and  to  fall  into  a  more  careful 
examination  of  our  ways. 

It  has  been  said  that  "the  statistician  who  knows 
nothing  but  statistics  does  not  know^  them."  The 
real,  or  at  least  the  chief,  value  of  figures  is  to  illus- 
trate principles.  He  has  an  improper  perception  of 
their  value  who  can  fall  into  ecstasies  over  the  state- 
ment that  a  ton  of  wheat  may  now  be  carried  for  half 
a  cent  per  mile,  while  the  same  service  cost  one  dol- 
lar before  steam  was  introduced,  and  who  can  at  the 
same  time  ignore  the  underlying  and  more  important 
fact  that  an  enormous  evil  has  arisen  from  this  dif- 
ference by  reason  of  the  misuse  of  the  power  which 


THE  DISCOVERY    OF  STEAM  53 

controls  tlie  new  convenience.  A  true  regard  for 
values  would  teach  him  to  realize  that  the  greatest 
conveniences  may  be  bought  too  dearly  if  freedom  be 
the  price  to  be  paid  foi'  them.  The  statistician  tells 
us  that  the  agricultural  labor  of  one  man  for  one 
year  is  equal  to  the  product  of  5,500  bushels  of 
wheat,  and  that  the  labor  of  three  men  for  one  year 
will  produce  subsistence  foi'  one  thousand  other  men  ; 
and  another  statistician  tells  us  that  a  railway  mag- 
nate has  amassed  within  the  past  twenty  years  more 
than  $300,000,000.  The  facts  set  forth  in  these  two 
statements  have  doubtless  an  intimate  relation  to 
each  other.  The  first  figures  express  a  redundancy 
of  food  products  which  the  steam  and  machinery 
have  given  to  mankind,  and  the  second  a  grossly 
unequal  division  of  the  results  of  activity.  The 
farmer's  large  product  is  rendered  far  less  valuable 
to  him,  and  the  consumer's  cost  is  rendered  far  higher 
to  him,  because  the  intermediary  transporter,  having 
laid  two  lines  of  rail  and  obtained  the  public  fran- 
chise, is  exerting  the  power  of  that  franchise  in  tak- 
ing undue  values  out  of  the  product,  both  from  the 
producer  and  the  consumer.  What  should  concern 
us,  in  such  a  case,  is  the  underlying  principle;  to 
learn,  if  we  can,  what  ultimate  law  is  violated, 
whereby  this  immense  disproportion  of  power  and 
result  is  obtained.  There  are  reformers  who  propose 
that  the  accumulations  of  corporate  magnates  shall 
be  directly  attacked,  and  limited  by  law.  But  this 
is  an  unconscious  concession  that  the  sanctities  of  civ- 


54  INDUSTRIAL   LIBERTY 

ilizatiou  (wLicli  sliould  be  equal,  as  nearly  as  is 
possible,  to  incentive)  may  be  violated  in  order  to 
produce  a  reform.  The  granting  to  individual 
corporations  of  powers  wliicli  belong  to  tlie  public, 
without  limiting  those  powers  by  such  careful  re- 
strictions as  will  insure  the  equal  benefit  of  society ; 
the  permission  given  by  the  public  for  the  exercise 
of  these  powers  in  secret  and  by  artificial  manipula- 
tion, thus  enabling  their  possessors  to  over-ride  pub- 
lic and  individual  rights — these  seem  to  be  the  primal 
causes  of  the  evil ;  and  the  relief  to  society  from  the 
untow^ard  results  Avould  seem  to  lie  in  a  careful  cor- 
rection of  these  causes.  It  is  with  this  phase  of  the 
subject,  rather  than  with  the  statistics  directly,  that 
I  have  to  deal ;  and  the  only  use  which  statistics  can 
afford  will  be  to  illustrate  the  force  of  the  true  prin- 
ciple. The  disposition  to  take  results  for  causes,  in 
the  study  of  political  and  economic  questions,  is  by 
no  means  uncommon,  and  it  is  a  course  which  is  fruit- 
ful of  many  confusions. 

"  In  the  investigations  undertaken  by  committees  of 
Congress  in  the  United  States,  the  causes  assigned 
by  various  witnesses  who  testified  before  them  were 
comprised  under  no  less  than  one  hundred  and  eiglity 
heads;  and  a  most  universal  diversity  of  opinion  was 
manifested  by  the  witnesses  who  appeared  before  the 
Royal  British  Commission.'" 

Among  the  special  causes  to  which  the  majority 
of  the  Commission  itself  attached   a  degree  of  im- 

'  "  Economic  Disturbances  Since  1873."  David  A.  Wells,  Z"^.  Science 
Monthly,  July,  1877,  p.  301. 


THE   DISCOVERY   OF   STEAM  55 

portance  was  tliis :  "  Clianges  in  the  distribution 
of  wealth,"  Now  changes  in  the  distribution  of 
wealth  are  results  rather  than  causes;  they  express 
existing  evils,  but  they  do  not  themselves  fully  ac- 
count for  the  origin  of  those  evils.  There  are  evil 
incidents  which  come  directly  from  them,  and  it  is 
only  in  this  sense  that  we  call  them  causes.  When 
"we  perceive  that  back  of  them  are  instances  bring- 
ing them  into  being,  we  come  to  realize  that  they 
are  brought  into  being  by  a  condition  of  things 
which  lies  behind  them,  and  thus  in  a  truer  sense 
they  are  results.  They  are  causes,  it  is  true,  of  what 
immediately  follows  ;  but  they  are  also  results  of 
what  immediately  preceded  them.  Now  the  removal 
of  such  an  intermediate  condition,  whether  we  call 
it  cause  or  result,  Avill  not  remove  the  underlying 
evil  of  the  cause.  An  arbitrary  limitation,  in  given 
cases,  of  accumulations,  or  an  arbitrary  division  of 
them  by  law,  might  temporarily  discourage  the  accu- 
mulator ;  but  if  the  processes  by  which  these  accumu- 
lations were  made  are  unrestricted,  either  he  or  some 
other  will  repeat  them.  No  hope  of  permanent 
remedy  can  come  from  merely  removing  a  result, 
when  the  creative  cause  of  that  result  is  left  undis- 
turbed. It  is  only  by  working  back  slowly  from 
ultimate  results,  by  passing  the  intermediate  cause — 
which,  as  we  have  seen,  is  also  the  intermediate 
result, — in  order  to  arrive  at  the  primal  and  funda- 
mental cause,  that  we  shall  be  enabled  to  find  the 
real  source  of  the  evil  to  be  corrected. 


56  •  INDUSTRIAL    LIBERTY 

Legislative  commissious  have  been  iiastituted 
Avitliiu  tlie  past  few  years  in  almost  every  country 
of  Western  civilization,  and  voluminous  reports  liave 
been  made;  "causes"  that  were  not  causes  have  been 
almost  universally  assigned ;  results  have  been  mis- 
taken for  causes,  and  causes  for  results,  and  results 
and  intermediate  causes  have  been  dealt  with  indis- 
criminately, as  if  they  were  primal  causes. 

In  consequence  of  this  confusion  there  has  been 
but  little  progress  toward  solution  of  the  economic 
problems  before  us.  The  British  Commission,  to 
which  we  have  referred,  has  attributed  the  existing 
evils  to  the  changes  in  the  distribution  of  wealth ; 
to  overproduction ;  to  impairment  of  agricultural 
industry ;  to  foreign  tariff ;  and  to  the  working  of 
the  British  Limited  Liability  Act.  Each  one  of 
these  "  causes  "  when  analyzed,  will  be  found  to  be 
a  result  that  lies  a  great  way  from  actual  causes, 
and  serves  only  to  complicate  the  inquiry  ;  and  thus 
it  is  largely  to  the  disposition  to  treat  these  results 
as  causes  that  the  legislative  reformer  fails  in  his 
efforts  at  reform.  In  contem])lating  tlie  multiplicity 
and  complexity  of  the  results  of  human  activity, 
the  mind  is  apt  to  become  absorbed  with  them,  and 
fails  to  perceive  their  relation  to  the  fundamental 
laws.  As  I  have  said,  they  confound  us  by  their 
multitude.  If  we  call  ourselves  back  to  the  consid- 
eration of  these  laws,  as  applicable  to  these  activi- 
ties, we  shall  greatly  simplify  the  problem ;  and  we 
shall  thus  be  enabled  to  realize  that,  in  the  immense 


THE   DISCOVERY   OE  Sl'EAM  57 

energies  called  into  being  by  steam  and  electricity, 
there  are  two  primary  things  which  ought  first  to  be 
considered,  viz. :  the  methods  which  have  been  and 
are  being  adopted  in  applying  these  energies  to 
modern  civilization  and  the  relations  which  these 
methods  bear  to  the  fundamental  natural  law.  Any 
remedy  for  the  re-establishment  of  the  normal  con- 
ditions of  society  must  be  founded  upon  a  knowledge 
of  these  methods  and  these  relations. 

Looking  at  modern  industry  in  the  light  of  general 
results,  we  find  it  under  the  control  of  artificial 
organizations,  a  control  w^hich  is  exerted  in  disregard 
of  individual  political  and  industrial  right.  Large 
appropriations  of  public  lands  and  assistance  by 
means  of  public  credit  have  been  obtained  from  a 
government  which  has  been  too  easily  influenced. 
While  human  energy  has  been  stimulated  by  the  in- 
troduction of  steam  and  machinery,  a  large  part  of 
the  fruit  of  this  energy  has  not  only  been  appro- 
priated by  the  managers  of  these  artificial  organiza- 
tions, but  through  the  means  employed  in  this 
appropriation  they  have  violated  the  fundamental 
principles  of  industrial  liberty. 

If,  in  the  multitude  of  riches  coming  from  me- 
chanical advancement,  somewhat  more  sifts  down  to 
the  laborer  than  did  formerly ;  if  his  physical  lot  is 
better  than  it  was,  this  of  itself  will  not  be  a  sufficient 
answer  to  the  demand  for  right.  His  sense  of  Jus- 
tice is  outraged  by  the  fact  that  artificial  and  ai-bi- 
trary  conditions  exist,  whereby  the  great  bounty  of 


58  INDUSTRIAL  LIBERTY 

nature  is  so  unequally  distributed  that  lie  is  made  a 
thrall.  Mr.  Giffen  for  England,  and  Mr.  Atkinson  for 
America,  have  shown  from  statistics  that  the  condi- 
tion of  the  workingman  in  the  past  fifty  years  has 
on  the  whole  gi'eatly  improved,  so  far  as  the  supply 
to  his  physical  wants  is  concerned.  But  it  is  not 
his  absolute  present  condition,  so  much  as  a  com- 
parison of  that  condition  or  a  contrast  of  it  with  the 
conditions  around  him,  that  comes  into  question.  In 
other  words,  it  is  the  increased  disparity  which  con- 
stitutes his  ground  for  discontent.  Indeed,  it  is  easy 
to  understand  that  the  bettered  physical  condition 
of  the  laboring  man  may  of  itself  be  a  reason  for  his 
discontent,  when  we  consider  that  this  better  condi- 
tion has  brought  with  it  a  better  discerning  faculty, 
a  better  power  for  comparing  and  contrasting  condi- 
tions, and  an  improved  capacity  for  reasoning  upon 
differences.  Hopelessness  is  born  of  this  sense  of 
injustice.  His  incentive  is  disturbed.  He  does  not 
compare  his  present  with  the  past  of  the  laboring 
classes.  He  measures  it  by  existing  surrounding 
conditions ;  and  it  matters  little  to  him  that  he  is 
better  fed  than  formerly,  or  better  clad,  so  long  as 
the  conditions  upon  which  this  better  food  and 
clothing  are  obtained  remain  arbitrary  and  unjust. 
It  is  this  that  constitutes  his  instinctive  dis- 
content. 

The  best  securities  of  civilization,  for  the  accumu- 
lator, as  well  as  for  the  oppressed  artisan,  rest  at 
last  upon  the  condition  of  equalized  individual  se- 


THE  DISCOVERY  OF  STEAM  59 

cui'ity.  And  Avlierever  individual  light  is  a  principle 
of  the  State,  property  cannot  be  securely  held  unless 
there  is  a  uniform  recognition  of  the  right  of  pos- 
session— a  general  right  of  contract — an  equality  of 
right,  as  sacred  to  the  small  owner  as  to  the  large, — 
a  general  sense  of  justice — a  condition  where  every 
man  may  have  a  reasonable  prospect  of  being  an 
owner  by  the  exercise  of  care,  thrift,  and  diligence. 
And  thus  an  unequal  disti'ibution  of  the  great  in- 
centives of  life  renders  the  holder  of  those  incentives 
less  secure,  and  Avorks  to  the  detriment  of  all.  It  is 
this  disturbance  of  the  equilibrium  of  the  body  poli- 
tic which  furnishes  at  once  the  exhaustless  and  rest- 
less energy  of  the  steam  interest,  and  the  motiveless 
inaction  of  the  tramp  ;  the  thrift  and  confidence  of 
the  class  which  in  one  way  or  another  is  artificially 
protected  and  stimulated,  and  the  hopelessness  of 
the  unorganized,  unguarded,  and  unprotected  indi- 
vidual. The  individual  has  this  instinctive  sense  of 
wrong ;  and  it  is  because  he  fails  to  realize  the  un- 
derlying causes  of  its  existence  that  his  resentment 
to  the  wrong  expresses  itself  in  something  like  a 
direct  retort,  in  violent  acts  and  false  theories,  and 
in  the  formation  of  such  organizations  as  the  Knights 
of  Labor  and  the  Socialists.  We  may  call  these  in- 
Judicious  and  foolish  ways ;  but  they  grow  out  of 
other  injudicious  and  foolish  ways ;  they  are  the 
product  of  wrongs  which  lie  behind  them ;  they  are 
in  the  logic  of  events.  The  methods  of  reform  which 
are  employed  belong  to  the  category  of  evils  which 


6o  INDUSTRIAL  LIBERTY 

it  is  intended  to  reform,  and  proceed  in  unconscious 
imitation  of  tlie  very  processes  which  constitute  the 
evil.  While  the  lex  talionis  is  not  a  law  of  civiliza- 
tion, but  of  barbarism,  the  resort  to  it  illustrates  the 
fact  that  there  are  barbaric  methods  among  us  which 
have  brought  it  into  exercise.  One  such  method 
generates  another.  Thus  when  a  corporate  power 
undertakes  to  over-ride  the  sanctity  of  contract,  and 
when  Knio-hts  of  Labor  undertake  to  over-ride  this 
sanctity,  the  industrial  law  becomes  supplanted  by 
military  force,  and  civilization  steps  Just  so  far  back- 
ward. Nevertheless,  occurrences  like  these  serve  the 
important  function  of  attracting  more  general  atten- 
tion to  the  existence  of  the  disease  in  the  body  politic, 
tkrough  the  careful  study  of  which  the  truer  means 
of  correction  are  thus  more  likely  to  be  at  last  de- 
veloped. 

Another  question  connected  with  steam  and  ma- 
chinery, arising  from  the  redundance  of  the  means  of 
subsistence  which  they  create,  although  an  important 
one,  is  not  often  discussed.  This  is  the  law  of  popu- 
lation— the  tendency  of  population  to  grow  more 
rapidly  than  the  means  of  subsistence.  The  consid- 
eration of  the  distribution  of  products  for  human 
consumption  is  of  itself  but  a  partial  and  inade- 
quate estimate  of  the  whole  economic  relation.  Since 
this  kind  of  distribution  is  but  a  meting  out  of  that 
which  is  consumed  and  appropriated  by  the  race,  it 
suggests,  as  correlatives,  another  distribution,  or  rather 
a  series  of  distributions,  concerning  the  race  itself. 


THE  DISCOVERY  OF  STEAM  6 1 

In  otlier  words,  on  one  side  there  is  an  estimate  of 
tlie  qualities  and  quantities  of  tlie  thing  consumed 
and  their  adaptation  to  the  consumer ;  and,  upon  the 
other  side,  there  is  the  necessary  estimate  of  quantity 
and  quality  of  the  thing  consuming  the  product,  and 
the  adaptation  of  the  consumer  to  the  product. 
Therefore,  comprehended  in  the  whole  question  of 
distribution,  there  must  be  considered  the  distribu- 
tion of  the  supply  of  the  product  as  it  affects  the 
distribution  of  the  supply  or  increase  of  the  race. 
In  the  distribution  of  the  supply  of  the  race  there  is 
involved  the  distribution  of  the  sexes,  the  distribu- 
tion of  human  faculty  and  quality,  and  the  tendency 
towards  the  increase  of  the  race. 

The  evils  which  arise  from  the  pressure  of  popula- 
tion upon  the  means  of  subsistence  are,  however, 
clearly  not  those  which  oppress  the  human  race  to- 
day. It  is  by  reason  of  the  redundancy  of  the 
means  of  subsistence  that  to  many  these  particular 
evils  never  seemed  more  remote  than  they  do  now. 
Indeed,  many  of  the  evils  which  are  j)eculiar  to  to- 
day arise  out  of  the  very  opposite  of  those  conditions 
which  are  contemplated  by  the  theory  of  Malthus. 
Besides  the  circumstance  that  they  do  not  appear  at 
present  to  be  threatening,  there  is  a  sentimental  re- 
luctance to  consider  them,  as  being  repugnant  to  our 
ideas  of  beneficence.  Nevertheless,  if  they  be  true, 
neither  the  assumed  remoteness  of  the  consequences 
nor  an  ideal  repugnance  ought  to  prevent  consid- 
eration of  them  as  factors    in    the    great    problem. 


62  INDUSTRIAL   LIBERTY 

A  cyclone  is  not  a  beneficence,  but  it  is  a  fact  which 
must  be  taken  into  account  in  the  consideration  of 
phenomena.  AVhen  Da^^^'in,  by  his  generalizations, 
established  the  fact  that  prolification  of  animal  life  has 
its  limit  only  in  necessity,  this  law  of  population  be- 
came a  central  fact  of  biological  science.  Happily, 
it  undergoes  many  important  modifications  in  its  ap- 
plication to  human  life.     As  Bonar  says : 

"  If  the  fear  of  starvation,  the  most  earthly  and  least 
intellectual  of  all  motives,  is  needed  to  'force  us  to  work 
at  first,  it  need  not  therefore  be  necessary  ever  afterwards. 
Within  civilized  countries,  in  proportion  to  their  civiliza- 
tion, the  struggle  in  the  lowest  stages  is  abolished  ;  the 
weakest  are  often  saved  and  the  lowest  raised  in  spite 
of  their  unfitness."  ' 

In  this  view  man  is  not  an  animal ;  he  is  a  citizen, 
and  population  is  checked,  not  only  by  these  miseries 
and  the  fear  of  them,  but  by  all  the  mixed  motives 
of  human  society.  In  the  redundancy  of  the  means 
of  subsistence  which  now  prevail,  may  we  not  there- 
fore come  to  find  an  intellectual  improvement  of  the 
whole  I'ace,  and  therefore  a  permanent  modification 
of  the  ratios  heretofore  existing  ?  It  may  be'  that 
through  the  employment  of  machinery  to  lighten  the 
general  burden  of  labor  there  will  i-esult  a  re- 
duction of  this  ratio  ;  or  it  may  be  that  from  the 
combined  resources  of  modern  industry  there  will 
come  a  quickening  of  the  faculties  that  will  tend  to 

'  "  Malthus  and  His  Work,"  by  James  Bonar,    London,  1S85,  p,  46. 


THE   DISCOVERY   OF  STEAM  63 

repress  excessive  increase.  Nevertlieless,  the  main 
features  of  the  law,  as  applicable  to  the  human  race, 
remain.  We  must  therefore  I'ecognize  the  present 
ratio  of  excessive  supply  of  subsistence  as  more  or 
less  transient.  There  are  multiplying  evidences  that 
what  has  been  called  "  World-Crowding  " '  is  progress- 
ing at  an  unprecedented  rate.  Steam,  whilst  it  has 
for  a  time  inverted  the  old  ratio  between  fecundity 
and  subsi^stence,  has  by  so  doing  only  served  to  stim- 
ulate to  a  greater  degree  the  increase  of  poj)ulation. 
The  mouths  are  comino;  like  o-erms  to  absorb  the 
excess.  At  some  time  the  forces  of  the  means  of 
subsistence  and  the  growth  of  population  ^\dll  be- 
come equal  in  the  race.  Whilst,  when  this  occurs, 
the  influence  of  intellectual  advancement  may,  as  I 
have  said,  moderate  the  struggle,  nevertheless  the 
struggle  in  some  degree  or  other  must  come,  and 
whether  it  be  fierce  or  mild,  of  one  thing  we  may  be 
assured,  that  the  rapidity  of  the  present  progress  of 
population  of  x\merica,  both  by  birth  and  immigra- 
tion, is  bringing  U23on  us  each  year  a  severer  require- 
ment from  republican  institutions.  The  problem  to 
the  Anglo-Saxon  unit  is  yearly  growing  more  com- 
plex. The  power  of  absorbing,  appropriating,  and 
assimilating  the  hundred  millions  of  people  which 
this  land  will  have  within  twenty  years,  must  of 
necessity  be  far  more   difficult    of   accomplishment 

'  "  World-Crowding,"  an  address  by  Robert  Giffen,  President  of  the 
London  Statistical  Society  ;  "Social  Problems,"  edited  by  Titus  Munson 
Coan,  N.  v.,  1S83.. 


64  INDUSTRIAL   LIBERTY 

than  tlie  power  of  assimilating  the  existing  popula- 
tion. There  is  an  imminent  necessity,  therefore,  for 
this  reason  as  well  as  for  many  others,  of  applying 
our  sanctions,  of  examining  our  fundamental  com- 
pact, of  looking  into  the  principles  upon  which  our 
government  rests,  and  of  seeing  that  the  functions  of 
that  government  are  properly  performed,  and  thus 
preparing  for  these  tests  which  are  coming  with  the 
certainty  of  destiny.  It  is  manifest  that  individual- 
ity must  gain  in  vitality  in  order  to  meet  the  re- 
quirement. 

The  tendency  is  common  to  assume  existing  gen- 
eral conditions  to  be  more  permanent  than  they 
really  are.  We  see  movement  in  detail,  but  fancy 
the  mass  motionless.  The  sum  of  things  seems  per- 
manent by  its  very  magnitude.  As  we  do  not  readily 
see  the  slow,  underlying  movement,  Ave  infer  a  sta- 
tionary condition.  Nor  is  it  by  the  comparison  of 
one  year  with  another  that  we  can  properly  learn 
the  larger  character  of  progress.  The  inunediate 
consequences  too  closely  follow  the  activities  to 
permit  such  a  comparison.  It  is  only  Avhen  ^ve  can 
stand,  as  it  were,  at  some  distance  from  the  acts, 
that  we  can  obtain  that  larger  conception  which 
will  enable  us  to  appreciate  the  larger  relation  of 
things  and  the  progress  which  belongs  to  them.  But 
every  thing  in  its  progress  gathers  new  influence  to 
modify  and  change  pre-existing  facts.  Thus  the 
poAv^er  of  steam,  regarded  foi'  a  long  time  as  an  un- 
qualified convenience,  is  gradually  beginning  to  be 


THE  DISCOVERY  OF  STEAM  65 

associated,  in  tlie  public  mind,  witli  the  incidental 
wrouo;s  of  its  mana<j:ement,  and  this  tends  to  awaken 
the  underlying  intellectual  force,  the  individual  sense. 
We  begin  to  learn  that  energy  has  been  generated 
more  rapidly  than  it  has  been  appropriated,  and  as  we 
realize  this,  the  formative  chai-acter  of  this  great 
factor,  hitherto  unperceived,  becomes  apparent. 
The  mileage  of  railroads  in  America  has  grown  at 
an  immense  rate  in  the  past  twenty  years,  but  it  is 
not  at  all  likely  that  it  will  continue  in  the  same 
ratio.  In  twenty  years  from  now  we  shall  have 
nearly  twice  our  population,  but  it  is  not  at  all 
probable  that  we  shall  have  twice  the  mileage  of 
raihvays.  We  are  therefore  arriving  at  a  stage 
where  the  ratio  of  building  will  be  changed ; 
where  there  will  be  a  less  proportion  of  miles  of 
railway  to  the  inhabitant  than  we  have  now.  With 
this  chauee  there  must  also  come  a  chancre  in  the 
relation  which  the  railways  occu})y  to  the  public. 
The  railways  are  accomplished  facts ;  and  as  we 
gradually  come  to  accustom  ourselves  to  the  con- 
veniences which  they  have  brought,  and  to  feel  the 
pressure  of  some  of  the  arbitrary  exactions  which 
have  been  made  incident  to  these  conveniences,  we 
may  expect  the  awakened  community  to  study  with 
more  intelligence  those  underlying  laws  of  industry 
and  economy,  and  through  this  study  to  readjust  the 
artificial  conditions  to  nature  ;  and  thus  to  marshal 
into  service  this  artificial  force  as  a  handmaid  to  the 
command  of  the  individual  force. 


66  INDUSTRIAL   LIBERTY 

Tlie  license  ^vllicll  tlie  railway  organizer  lias  en- 
joyed has  in  part  come  from  tlie  desire  of  the  public 
to  have  railways.  The  world  having  acquired  rail- 
ways, the  license  will  thus  be  likely  to  be  brought 
Avithin  more  effectual  guards.  De  Tocqueville,  in 
his  last  important  work,  notices  how  much  more  the 
Frenchmen  of  the  present  da}^  resemble  one  another 
than  did  those  of  the  last  generation.  But  it  seems 
to  me  that,  in  consideration  of  the  formative  charac- 
ter of  the  steam  factor  in  our  civilization,  this  ten- 
dency towards  sameness  must  be  regarded  as  more 
or  less  transient, — as  an  influence  which  wdll  receive 
its  check  in  the  revival  of  individuality,  stimulated 
into  greater  activity  by  the  very  repression.'  Until 
lately,  as  I  have  indicated  above,  there  has  been  no 
systematic  legislation  towards  the  restraint  of  the 
methods  by  which  our  material  development  has 
been  acquired.  On  the  contrary,  the  legislation 
has  all  tended  to  stimulate  those  artificial  methods. 
But  we  have  at  length  created  the  first  act  of  ten- 
tative legislation  in  the  opposite  direction,  and  this 
has  been  received  with  so  much  favor  that  there  is 
reason  to  believe  that  it  is  but  the  beginning  of  a 
systematic  process. 

The  formative  character  of  modern  invention  in 
its  relation  to  civilization  may  be  illustrated  by 
the  invention  of  gun230wder.  At  first,  it  was  a 
merely  destructive  agent.  Graduall}^,  however, 
subdued  under  the   conditions  of  growing  civiliza- 

J  '  Mill  on  "  Liberty,"  New  York,  1879,  130. 


THE   DISCOVERY  OF  STEAM  6/ 

tion,  it  widened  tlie  division  between  militant  and 
industrial  life.  It  l)ronglit  the  professional  soldier 
into  being,  and  tlius  it  became  possible  for  industry 
to  be  pui'sued,  not  as  an  incident  of  military  occu- 
pation, or  as  secondary  to  it,  but  entirely  separate 
from  it,  and  therefore  destined  gradually  to  grow  su- 
perior to  it.  From  this  the  militant  conditions  be- 
came at  length  the  servant  of  industry,  and  war 
became  the  preserver  of  peace.  Similarl)^,  we  may 
expect  that  steam,  first  interfering,  as  I  have  shown, 
with  industrial  law,  in  calling  into  being  arbitrary 
methods,  will,  as  its  industrial  conditions  become 
better  understood,  fall  into  its  place  as  the  promoter 
of  liberty,  as  well  as  of  civilization.  Instead  of  being 
an  interferer  with  it  as  it  now  is,  it  will  become  one 
of  the  strongest  means  for  its  enforcement. 

Viewing  the  influence  of  the  steam  power  upon 
industrial  right  for  the  past  thirty  or  forty  years, 
it  presents  the  aspect  of  a  huge  task-master  stand- 
ing between  the  producing  mass  of  mankind  and 
the  consuming  mass.  On  the  one  hand  it  opens 
up  new  territories,  sends  its  servants  into  them, 
and  stimulates  them  to  production  ;  and  on  the  other 
it  delivers  the  means  of  subsistence  in  enlarged 
abundance,  and  stimulates  the  consumer  to  an 
increase  of  population.  While  it  thus  carries  the 
product  from  one  to  another,  it  appropriates  to  itself 
all  of  the  value  that  can  be  taken  out  of  that  prod- 
uct, to  enable  it  further  to  enlarge  its  power  and 
make  it  lasting.     It  is  manifest  that  the  physical  re- 


68  INDUSTRIAL   LIBERTY 

sources  of  tlie  "world  have  their  necessary  limi- 
tations. There  is  the  limitation  by  reason  of  the 
area  itself,  and  therefore,  in  the  occupation  of  terri- 
tory and  enlarging  of  production  there  must  be  a 
time  when  the  area  will  be  occupied  and  production 
will  be  equalled  by  the  growth  of  population  ;  when 
the  supply  of  the  means  of  subsistence  will  come  to 
be  absorbed.  If  the  tendencies  of  ratio  be  as  Mai  thus 
has  given  them — the  general  tendency  of  the  increase 
of  population  greater  than  the  general  tendency  of 
the  increase  of  the  means  of  subsistence — then, 
notwithstanding  the  present  interruption  of  this 
ratio,  that  time  may  not  be  very  far  remote.  Can 
it  be  possible  that  this  increase  of  production, 
thus  over-stimulating  the  increase  of  population,  is 
only  to  bring  us  again  to  face  the  crisis  of  famine 
and  death,  and  in  a  more  intense  degree  ?  Is  this 
the  wall  of  adamant  to  which  our  civilization  is 
marching  ?  Shall  we  j)i'o^^e  at  last  that  life  is  an 
"  insatiate  cormorant  "  which,  "  consuming  means, 
soon  preys  upon  itself  "  ?  If  the  biological  law  which 
has  been  so  clearly  demonstrated  by  Darwin's  gen- 
eralization be  in  all  its  sequences  applicable  to  the 
human  race,  then  this  must  be  the  inevitable  result. 
If  it  is  inapplicable  in  any  degree  to  the  human  race, 
it  must  be  by  reason  of  some  higher  mental,  or  lower 
physical,  (piality  belonging  to  that  race.  In  other 
Avords,  it  must  result  from  the  progressive  physical 
incapacity  for  increase,  or  -from  some  intellectual 
development  which   shall  constitute  what  Malthus 


THE   DISCOVERY  OE   STEAM  69 

calls  "  M  moral  restraint  upon  increase."  A  physical 
incapacity  would  be  totally  inconsonant  with  the  pro- 
gress of  civilization.  There  is  then  left  nothing  but 
the  elevation  of  the  individual  into  a  condition  of 
moral  self-restraint,  so  that  if  the  tendency  of  human 
life  be  forward  in  the  line  of  civilization,  it  points 
definitely  to  the  accomplishment  of  this  end  ;  and,  as 
this  is  also  the  end  upon  which  ultimate  individual 
freedom  fundamentally  stands,  it  of  necessity  points 
to  a  higher  democracy.  The  same  prudence  of 
nature  which  permits  the  world  to  preserve  itself 
permits  it  also  to  govern  itself.  It  is  thus  that  the  ten- 
dency towards  democracy,  like  the  tendency  towards 
self-preservation,  has  its  being  in  the  sum  of  all  ten- 
dencies ;  and  thus  the  paradox  which  I  indicated  at 
the  l^eginning  of  this  chapter  may  be  explained.  The 
steam  factor  proves  formative.  At  first  hostile  in  its 
methods  to  the  higher  qualities  of  that  civilization 
whose  material  advancement  it  furnishes,  it  after- 
wards becomes  modified  by  the  quiet  underlying 
persistent  force  of  the  individual  sense.  The  ten- 
dencies of  civilization  have  their  largest  expression  in 
the  central  principle  of  evolution ;  since  all  civiliza- 
tion is  marked  by  the  two  qualities  of  progress,  and 
progress  in  a  fixed  direction  ;  and  the  sum  of  phe- 
nomena of  existence  shows  this  progress,  as  Mr.  Spen- 
cer has  pointed  out,  to  be  from  the  indefinite  and 
homoo-eneous,  through  the  various  stao-es  of  differ- 
entiation,  ever  enlarging,  toward  the  heterogeneous 
and    the    definite.     In     other    words,    it    is    from 


^0  INDUSTRIAL   LIBERTY 

the  liomogeueity  of  iiiaukind — the  likeness  of  one  to 
the  other — the  lesser  degree  of  individuality — to 
the  heterogeneity  of  mankind,  which  expresses  the 
greater  unlikeness  of  the  one  to  the  other,  and  the 
largest  type  of  individuality,  and  thus  the  largest 
play  of  nature's  forces  through  individual  life. 

The  question  then,  broadly  stated,  is  this :  has  steam 
— this  unprecedented  element  of  strength — come  to 
rule  and  finally  defeat  civilization,  or  to  be  ruled  by 
it  ?  Must  human  liberty  be  subjected  to  it,  or  must 
it  be  made  subject  to  human  liberty?  If  it  is  to 
create  a  loss  of  individuality,  to  impel  the  race 
towards  a  homogeneous  condition,  then  its  civilizing 
tendency  in  the  largest  sense  does  not  and  cannot 
exist.  If  in  furnishing  convenience  it  permanently 
represses  the  individual  instinct,  it  must  prove  more 
powerful  than  political  liberty,  and  can  bring  only 
slavery.  If,  in  a  word,  it  be  not  appropriated  by 
liberty,  however  beneficent  it  may  be  in  some  re- 
spects, it  must  engulf  it.  But  such  a  conclusion 
does  not  accord  with  the  sum  of  the  tendencies  of 
the  world's  growth  from  the  beginning.  From  the 
time  when  men  lived  in  the  woods  and  the  caves  to 
the  present,  this  great  general  tendency  has  been 
just  in  the  opposite  direction.  When  new  elements 
came  into  civilization,  they  were  organized  and 
ap})ropriated.  They  often  had,  it  is  true,  at  first  a 
deterring  effect,  but  the  force  of  civilization,  when 
it  at  last  came  to  appropriate  these  elements,  made 
them  to  further  the  general  direction.     As  it  has 


THE  DISCOVERY  OF  STEAM  7 1 

thus  formerly  been  the  case  ^vitll  every  material  im- 
provement that  has  been  made,  it  is  not  probable 
that  civilization  will  now  fail  simply  by  reason  of  the 
greater  magnitude  and  multitude  of  its  constituent 
elements.  In  other  words,  it  is  not  probable  that 
evolution,  which  preserves  one  general  direction 
from  sameness  to  diiference,  will  fail  in  its  larger 
and  more  progressive  stages. 

We  shall  not  iiud  any  solution  of  the  problem  by 
assuming  that  those  principles  of  government  which 
have  been  verified  by  the  experience  of  the  past 
have  become  useless  under  the  new  and  more  com- 
plex surrounding  conditions.  We  shall  find,  on  the 
contrar}^,  that  our  failure  to  progress  toward  the  so- 
lution of  the  problem  results  from  our  having  for- 
gotten or  overlooked  these  principles.  It  is  not 
therefore  necessary  that  we  should  look  about  to 
discover  new  princi]3les,  but  it  is  necessary  to  re- 
examine those  which  are  already  kno^vn,  and  make  a 
rigorous  application  of  them  to  the  new  and  complex 
conditions. 

What  we  have  practically  and  particularly  to  con- 
cern ourselves  with  is  the  influence  which  this  last 
and  largest  gift  to  mankind  exerts  upon  human  free- 
dom. In  order  to  measure  that  influence,  it  will  be 
necessary  to  keep  in  mind  the  fundamental  principles 
of  industrial  freedom ;  and  to  gange  all  conveniences, 
all  material  progress,  and  all  political  association,  by 
these  principles.  When  we  come  to  apply  this  test, 
if  we  find  that  our  temporary  successes  fall  out  of 


"2  INDUSTRIAL   LIBERTY 

accord  with  it,  and  cannot  be  brought  into  accord, 
then  the  methods  which  have  produced  these  suc- 
cesses will  have  to  be  abandoned,  no  matter  what 
temporary  physical  conveniences  they  may  have  pro- 
duced. This  is  inevitable  if  freedom  is  to  continue. 
But,  for  my  part,  I  do  not  believe  that  the  subjection 
of  the  jDhysical  forces  to  the  control  of  the  rule  of 
political  freedom  will  involve  any  sacrifice  of  the 
best  fruits  of  industry.  On  the  contrary,  this  sub- 
jection will,  I  believe,  tend  directly  and  naturally 
to  produce  the  largest,  most  permanent,  and  most 
efficient  industrial  well-being  that  mankind  under  the 
most  favorable  conditions  is  capable  of  creating  and 
enjoying. 


CHAPTER  III 

THE    INDUSTRIAL    CORPORATION 

The  corporation,  as  a  device  for  furthering  indus- 
try, when  it  is  judged  by  the  definition  which  I  have 
given  of  industrial  liberty,  must  be  regarded  as 
something  of  a  political  solecism.  It  is  an  artificial 
structure  for  which  no  adequate  substitute  has  yet 
been  devised,  and  its  chief  cause  of  being,  even  in 
the  qualified  kind  of  republic  which  we  have,  is  that 
it  is  a  means  of  public  convenience.  The  corpora- 
tion came  into  existence  under  conditions  which 
were  anything  but  republican  in  their  character,  and 
from  time  to  time  it  has  been  clothed  with  other 
qualities  which  are  alike  unrepublican.  As  it  is  to- 
day constituted  and  conducted,  it  confronts  us  as  a 
serious  threat  to  the  harmonious  progress  of  the  re- 
publican idea, 

A  brief  analysis  of  what  is  called  the  quasi-ipuhlic 
corporation,  which  is  the  kind  with  which  we  have 
mostly  to  deal,  will  serve  to  make  this  proposition 
more  clear.  It  contains,  among  its  various  antago- 
nisms to  equal  political  right,  many  which  have  ac- 
companied it  from  the  beginning,  and  some  which 
have  been  imparted  to  it  by  modern  use  and  legislar 

73 


74  INDUSTRIAL  LIBERTY 

tion.  It  is  substantially  a  perpetuity.  In  railway 
corporations,  for  instance,  the  deaths  as  they  occui- 
among  the  shareholders  from  time  to  time,  the  trans- 
fers of  shares,  as  they  are  constantly  occurring,  and 
the  deaths  and  removals  of  officers,  make  but  little 
difference  in  the  general  policy  and  conduct  of  the 
company ;  and  since  it  moves  in  solido,  "without  ma- 
terial change  on  account  of  these  incidents,  its  move- 
ment is  necessarily  continuous,  and  it  has  a  life  prac- 
tically unmeasured  by  any  definite  time.  Another 
quality  of  the  corporation  is,  that  there  exists  in  it 
a  limitation  of  the  liability  of  the  shareholders. 
Thus,  however  bankrupt  it  may  become,  the  liabil- 
ities of  the  shareholders  do  not  usually  extend 
beyond  the  loss  of  their  shares.  If  it  become  in- 
debted beyond  its  assets  to  any  extent,  the  loss  falls 
somewhere  else  than  on  the  owners  or  manao-ers  who 
create  that  loss.  There  is  thus  a  separation  of  power 
from  responsibility  for  the  misuse  of  that  power.  Be- 
sides these  features,  there  is  in  all  these  associations, 
as  they  are  at  present  managed,  a  disseverance  of 
control  from  ownership.  The  conferring  of  con- 
trol by  the  shareholders  to  the  president  and  board 
of  directors  is  assumed  to  be  the  result  of  examina- 
tion, deliberation,  and  choice,  but  in  point  of  fact  it 
is  usually  of  the  most  perfunctory  character,  and 
when  conferred,  this  control  is  but  little  under  the 
inspection,  and  more  rarely  under  the  iuliuence,  of 
the  shareholders.  It  is  true  there  are  meetings  of 
the  shareholders,  elections  of  officers,  and  audits  of 


THE  INDUSTRIAL    CORPORATION  y$ 

accounts ;  but  the  meetings  are  generally  for  heai'ing 
rather  than  for  determining  any  thing ;  the  elections  are 
usually  upon  made-up  tickets  largely  voted  by  proxy, 
which  is  a  mode  of  voting  not  recognized  except  by 
special  right  contained  in  the  charters  ;  and  the  audits 
usually  concern  merely  the  ministerial  details  of  the 
business.  It  is  rare  indeed  that  these  gatherings  are 
either  deliberative  or  critical,  or  that  they  consider 
the  policy  of  the  road  or  the  manner  of  its  control, 
which  is  thus  by  common  consent  left  entirely  to 
the  discretion  of  the  officers.  There  is  assumed 
to  be  a  large  warrant  for  this  course,  derived  from 
practical  experience ;  the  theory  being  that  such 
absolute  control  is  necessary,  in  order  to  promote 
efficient  action  in  the  constant  contests  and  competi- 
tions between  the  railways;  that  the  power  used 
must  therefore  remain  uncircumscribed  in  the  hands 
of  those  immediately  using  it.  Indeed,  this  is  treated 
as  an  axiom  of  railway  management.  It  is  largely 
from  this  theory  that  in  all  direct  movements  of 
policy  the  wishes  of  the  shareholders  are  as  little 
regarded  as  those  of  private  soldiers  in  the  rank 
and  file  of  an  army.  While  this  theory  may 
have  some  reason,  so  far  as  concerns  active  compe- 
tition, the  great  considerations  of  public  policy  and 
private  honesty  stand  against  its  continuance.  Such 
control  is  apt  to  be,  and  often  is,  employed  for  the 
manipulation  of  markets  against  the  interests  of  the 
shareholders  ;  for  the  diversion  of  the  ownership  from 
owner  to  custodian,  both  of  tlie  property  which  be- 


76  INDUSTRIAL   LIBERTY 

longs  to  tlie  shareholder  and  of  the  right  which 
belongs  to  the  public ;  and  for  general  discrimina- 
tions not  provoked  by  competition.  What  conduces 
largely  to  this  control,  so  far  as  the  shareholders  ai-e 
\  concerned,  is  that  the  ownership  of  the  shares  is 
•1  scattered  not  only  over  this  country,  but  throughout 
Europe,  and  that  a  very  considerable  proportion  of  the 
stocks  of  many  of  the  railways,  especially  the  most 
active,  is  held  by  foreign  owners.  Of  the  Pennsyl- 
vania Raih'oad  shares,  for  instance,  two  fifths  are 
owned  in  England.  Besides  this,  the  ease  with  which 
these  shares  are  bought  and  sold  on  the  exchanges 
of  London  and  New  York,  and  the  frequency  of  such 
sales,  tend  to  give  to  the  shareholding  ownership 
something  of  a  migratory  character  which  is  not 
conducive  to  careful  inspection  or  control. 

Another  unwholesome  quality  of  the  industrial 
corporation  under  existing  management  is  that 
which  permits  the  individuals  who  manage  or  con- 
trol one  corporation  to  deal  with  themselves  under 
cover  of  a  separate  corporate  franchise,  as  if  they 
were  separate  individual  persons.  Through  this 
means  the  managers  of  a  railway,  by  association 
with  others,  or  among  themselves,  obtain  franchises, 
V  with  which  they  create  an  organization  for  the  pur- 
pose of  preying  upon  the  profits  of  the  railway  cor- 
pr^ration,  which  they  control  but  do  not  own.  Thus 
there  is  establislied,  by  legal  fiction,  a  duality  where- 
by there  is  diverted  from  the  real  owner  to  the 
ownership  of  tlie  custodian  a  i-tai't  of  that  property 


THE   INDUSTRIAL    CORPORATION  'J J 

which  is  held  in  custody.  This  is  a  process  which, 
as  I  shall  hereafter  endeavor  to  show,  has  been  one 
of  the  largest  and  most  fruitful  causes  of  existing  in- 
dustrial evils. 

From  the  circumstances  here  indicated  it  will  be 
found  that  there  exists  between  the  managers  of  cor- 
porations and  the  shareholders  an  essential  relation  of 
trust  which,  as  at  present  very  loosely  realized,  has 
no  further  guard  for  faithful  performance  than  that 
grounded  in  the  expectation  of  these  shareholders  to 
receive  their  usual  dividends. 

But  beyond  this  trust  there  exists  also  in  all  quasi- 
public  corporations  another  essential  duty,  namely, 
that  which  the  whole  corporation  owes  to  its  creator 
— to  the  citizen  and  to  the  sum  of  the  citizens  con- 
stituting the  public.  I  know  that  this  latter  relation 
is  one  which  has  not  been  treated  as  falling  within 
the  strict  domain  of  trust.  It  is  true  it  has  been 
called  a  trust,  but  vaguely,  in  an  ethical  rather 
than  in  an  economical  sense.  Nor  has  any  attempt 
ever  been  made  to  throw  around  it  that  supervision 
which  is  essential  to  its  proper  administration.  And 
our  failure  in  this  regard  has  gotten  us  into  many  of 
our  difficulties  by  preventing  us  from  placing  about 
it  those  essential  guards  which  secure  honest  and  faith- 
ful performance  of  duty.  It  has  in  all  respects  as 
much  of  the  trust  quality  as  that  which  exists  between 
the  managers  and  the  shareholders,  and  it  is  altogether 
more  important.  It  is  only  by  so  treating  it  that  a 
proper  observance  of  the  duty  involved,  whatever  it 


78  INDUSTRIAL    LIBERTY 

may  be  called,  can  be  secured.  I  base  the  idea  of 
the  existence  of  trusts  in  modern  industry  upon 
this  principle :  that  whenever  any  man  or  set  of  men 
hold  or  manage  property  which  belongs  to  others, 
they  necessarily  hold  and  manage  it  as  trustees. 
Whether  we  call  the  relation  a  trust  or  not,  it  is  one 
which  arises  out  of  the  necessities  of  the  case ;  and 
when  property  so  held  and  managed  consists  of  a 
franchise  of  a  ^?/6^.s/-public  kind,  the  controllers 
of  that  franchise,  from  like  necessity,  stand  in  the 
relation  of  trustees  to  the  grantors  of  that  fran- 
chise, and  the  trust  thereby  created  is  of  a  pub- 
lic kind,  because  the  custodians  are  the  servants  of 
the  public  for  whose  convenience  the  franchise  was 
gTanted. 

We  seem  to  be  suifering  in  this  country  from  too 
strict  an  adherence  to  the  law  of  precedent,  or  rather 
from  too  narrow  a  \'iew  of  the  application  of  pre- 
cedent ;  from  too  narrow  an  interpretation  both  of 
the  nature  of  the  corporation  and  of  the  trust  as 
applied  to  our  larger  industrial  advancement.  Many 
trusts  have  grown  out  of  the  new  relations  of  modern 
industry.  They  have  sprung  from  the  multiplicity  of 
facts  and  from  the  complex  relations  in  which  these 
facts  stand  toward  each  other.  Statutes  in  some  of 
the  States  aim  to  prescribe  the  creation  of  the  trust 
relation  within  narrow  limits.'     They  determine,  in 

'  New  York,  Pennsylvania,  Connecticut,  Kentucky,  Vermont,  Michigan, 
Wisconsin,  Minnesota,  California,  Dakota,  North  Carolina,  and  Georgia. 
("American  Statute  Law,"  F.  J-  Stimson,  sec.  1703.) 


THE  INDUSTRIAL    CORPORATION  79 

substance,  the  allowable  objects  of  trusts  to  be  tbe 
selling  of  lands,  receiving  of  rents  and  profits  of 
lands,  the  ajiplying  of  them  to  the  use  of  any  person 
for  his  life  or  any  shorter  time  ;  trusts  for  the  accu- 
mulation of  rents  and  profits  for  the  time  by  law 
alloAved ;  for  the  benefit  of  any  person,  where 
the  trust  is  fully  expressed  and  clearly  defined, 
and  for  certain  public  and  charitable  purposes.  But 
in  an  important  sense  such  a  limitation  is  beyond 
the  power  of  the  legislature.  Legislation  cannot 
change  a  structure  by  giving  it  a  new  name.  It 
cannot  limit  a  growth  which  comes  out  of  necessary 
industrial  conditions,  by  calling  it  something  other 
than  it  is.  If  the  legislature  is  to  succeed  in  pre- 
venting the  existence  of  a  given  trust  relation,  it 
must  prevent  the  industries  from  which  that  relation 
necessarily  grows ;  for  these  industries  are  the  causes, 
and  the  fact  of  the  trust  follows  by  the  law  of  logic 
and  nature,  as  effect  follows  cause.  The  legislature 
must  abolish  the  corporation  and  the  railway,  with 
the  relations  which  the  corporation  and  the  railway 
necessarily  hold  to  the  public,  if  it  would  effectually 
prohibit  the  existence  of  all  other  trusts  save  those 
which  it  has  specifically  prescribed.  These  relations 
have  sprung  into  being  in  the  flowering  of  modern  in- 
dustry, and  it  is  only  by  examining  their  develoj)ed 
structure  that  we  are  enabled  to  learn  whether  or 
not  they  contain  the  essential  elements  of  trust. 
The  employment  of  corporate  methods  is  fruitful  of 
this  kind  of  growth ;  and  the  adequate  governance 


<So  INDUSTRIAL   LIBERTY 

of  these  relations  can  only  be  accomplislied  by  tlie 
realization  of  the  real  facts  and  the  study  of  the  real 
substance. 

The  technical  distinctions  which  we  persist  in  main- 
taining between  the  public  and  the  private  corporation, 
have  also  limited  our  view  of  this  broader  scope,  while 
the  reasons  for  these  distinctions,  by  the  enlargement 
of  industry,  have  in  many  cases  disappeared.  Thus, 
for  instance,  an  immense  change  has  taken  place 
throu2;h  industrial  ofrowth  in  the  relations  between 
the  government  and  the  individual.  Formerly,  every 
thing  that  was  of  a  public  chai'aeter  fell  within  the  do- 
main of  the  government ;  but  by  the  enlargement  of 
industry  and  the  enlarged  employment  of  the  corpora- 
tion we  have  transcended  this  bound,  and  the  corpora- 
tion now  takes  a  necessaiy  part  in  the  service  of  the 
public.  The  functions  of  the  government,  and  the 
functions  of  the  ^Mf/.s'/-public  corporation,  as  they  are 
exercised  to-day,  often  trench  upon  each  other. 
They  are  powers  which  to  some  extent  and  in  some 
places  necessarily  overlap.  It  therefore  recpiires  a 
nicer  examination  of  the  details  of  the  functions  of 
each,  and  a  clearer  delineation  of  these  functions, 
than  any  we  have  before  made.  By  the  distinction, 
as  it  has  heretofore  existed,  between  public  and  pri- 
vate corporations  themselves,  all  corporations  have 
been  placed  in  the  private  category,  except  those 
which  have  been  made  a  part  of  the  politi- 
cal or  municipal  machinery  of  the  government. 
But,   in  considering   the  essential  qualities   of   the 


THE  INDUSTRIAL    CORPORATION  -         8 1 

modern  railway  corporations,  we  cannot  fail  to 
find  that  tliey  employ  powers  which  directly  affect 
the  public ;  that  in  the  course  of  their  administration 
this  cannot  be  otherwise,  and  that  therefore  they 
cannot  any  longer  properly  fall  under  the  old  distinc- 
tions. They  cannot  therefore  safely  be  treated  as 
private.  For  instance,  from  the  agreements  which 
any  two  quai:<i-])yi}oY\Q.  corporate  bodies,  such  as  rail- 
ways, make  with  each  other,  very  essential  conse- 
quences proceed  :  not  only  for  the  public,  but  for 
individual  political  right.  We  find  that  their  neces- 
sary powers  often  enable  them  to  interfere  with  the 
freedom  of  private  contract  between  citizen  and  citi- 
zen, and  to  ally  themselves  with  certain  citizens  and 
interests  to  the  detriment  of  other  citizens  and  inter- 
ests. Obviously  it  is  an  abuse  of  terms  to  call  a 
power  which  is  accompanied  with  such  consequences 
a  private  power.  That  power  is  essentially  public 
and  political.  To  allow  that  a  railway  company  may 
make  agreements  in  secret,  upon  the  assumption 
that  it  will  not  violate  a  public  right,  is  an  impossible 
concession.  Experiences  multiply  around  us  con- 
stantly to  prove  that  railway  compacts  made  in 
secret  are  not  for  the  political  common-wealth.  The 
motives  which  promote  railway  enterprise  are  mainly 
those  of  private  gain ;  and  when  these  are  accom- 
panied by  great  powers,  which  may  be  exercised  in 
secret,  their  inevitable  tendency  is  to  override  both 
public  and  private  political  right.  If  we  are  to 
discover  the  qualities  of  agreements  between  railway 


82  INDUSTRIAL  LIBERTY 

corporations  only  by  the  consequences,  we  have  no 
guaranty  of  right ;  since  all  experience  has  shown  that 
secret  compacts  do  exist,  and  that  they  do  great  in- 
jury, long  before  the  public  can  learn  of  their  exist- 
ence. The  public  being  interested,  the  public  have 
a  right  to  a  knoAvledge  of  the  methods  employed. 
This  right  rests  upon  the  essential  public  character 
and  quality  of  the  franchise.  It  is  not  a  matter  of 
legislation ;  it  is  an  inherent  thing.  The  franchise 
should  be  treated  as  public,  because  its  largest  duties 
are  to  the  public. 

Snuilarly  we  are  in  the  habit  of  contemplating 
trusts  with  reference  to  antecedent  conditions,  of 
confining  them  to  the  tenure  of  lands  and  private 
estates ;  whereas,  by  the  enlargement  of  industrial 
conditions,  the  railway  management  is  forced  into 
direct  relation  with  the  citizen  and  with  his  political 
rights.  Thus  the  facts  have  outgrown  the  appli- 
cation of  the  principles ;  or  rather  the  application 
of  legal  principles  has  not  kept  pace  with  the 
growth  of  modern  industry.  The  classification  of 
the  corporation  as  a  private  institution,  or  even  as 
a  q^iasi■^^^S:X\Q,  institution,  and  of  trust  as  a  private 
relation,  although  adequate  when  industry  was  con- 
ducted entirely  as  private  enterprise,  and  when  trust 
was  aj^plied  only  to  the  tenure  of  lands  and  pi-ivate 
estates,  has  as  we  have  seen,  become  obviously  in- 
adequate since  industry  and  its  relations  have  thus 
grown  to  be  essentially  public. 

That  the  latter  of  the  t\vo  kinds  of  trust  which  I 


THE  INDUSTRIAL    CORPORATION  83 

have  indicated  is  altogether  the  more  important,  will 
be  evident  from  an  examination  of  the  fundamental 
relations  which  exist  between  the  creator  of  the 
trust  and  the  created.  A  j)ower  deiived  from  the 
people,  the  exercise  of  which  in  any  degree  affects 
their  political  or  economical  conditions,  either  to- 
wards each  other  or  towards  that  power,  of  neces- 
sity carries  with  it  a  duty  from  the  creature  or 
the  corporation  to  the  creator.  This  of  necessity 
also  partakes  of  a  political  character.  The  power 
thus  granted  being  inseverable  from  the  grant  and 
involving  an  inseverable  public  duty,  the  relation 
thereby  established  grows  out  of  the  very  fact  and 
can  be  no  other  than  a  public  and  imperative  trust. 
This  is  paramount  to  that  which  exists  between  the 
officers  and  the  sharehoiders  ;  because,  while  that 
concerns  only  a  comparatively  few  individual  inter- 
ests for  private  profit,  this  betw^een  the  corporation 
and  the  public  concerns  the  whole  people  ;  and  this 
public  concern  is  the  essence  of  the  consideration  by 
which  the  franchise  came  into  being — it  is  the  whole 
motive  for  which  it  was  conferred.  Certain  corolla- 
ries arise  from  this,  of  which  I  may  suggest  one  or 
two. 

When  a  corporate  franchise  is  created  by  a  State 
whose  existence  depends  upon  the  delegated  power 
of  the  people,  the  franchise  so  created  cannot  legiti- 
mately confei'  any  greater  power  than  that  A\'hich 
belongs  to  its  creator ;  and  any  attempt  to  exercise 
any  greater  power  by  means  of  such  franchise  is,  so 


84  INDUSTRIAL   LIBERTY 

far  as  such  attempt  is  successful,  necessarily  destruc- 
tive of  the  ends  and  aims  of  republicanism,  or  indeed  of 
the  end  and  aims  of  any  government  Avhich  assumes 
any  sovereignty.  If  a  corporation  may  be  given  a 
franchise  by  a  people,  through  their  delegates,  to  exer- 
cise any  power,  by  implication,  however  slight,  which 
is  uurepublican  in  its  character,  the  government 
which  has  conferred  it  has  ceased  to  be  a  republic. 
These  corollaries  may  appear  commonplace,  but  the 
habit  which  we  have  of  contradicting  them  in  our 
daily  practice  seems  to  me  to  be  a  warrant  for  their 
repetition. 

There  are  then  the  two  kinds  of  trusts,  which  for 
definiteness  I  ^vill  re-state  :  First,  that  which  subsists 
between  the  ^^ias^-public  corporation  and  the  share- 
hokler,  of  the  private  and  commercial  kind,  for 
profit.  This  we  may  designate,  for  the  sake  of  dis- 
tinction, as  tlie  leaser  trust.  Second,  that  which  sub- 
sists between  the  quasi-'^nhliQ,  corporation  and  the 
citizens,  as  political  equals.  This,  having  an  essen- 
tially public  character  involving  equal  political  right, 
we  may  designate  as  the  larger  t/rust,  or  the  trust  for 
public  right.  It  is  necessary  that  the  difference  be- 
tween these  two  should  be  clearly  borne  in  mind. 
The  first  or  lesser  trust  is  essentially  private  and 
commercial.  It  is  limited  to  the  owning  shareholders 
of  the  corporation.  It  is  a  trust  arising  out  of  the 
relations  which  those  shareholders  hold  to  each  other 
as  parties  and  privies.  It  is  true  that  by  its  violation 
there  come  to  be  involved  questions  of  public  })olicy 


THE  INDUSTRIAL    CORPORATION'  85 

and  rigbt,  and  that  this  violation  has  been  the  means  of 
an  immense  inequality  in  the  distribution  of  the  fruits 
of  industry.  But  nevertheless,  in  its  structure  it  is 
a  trust  which  is  created  by  the  act  of  the  parties 
themselves,  and  comes  under  the  definition  of  private 
trust.  The  other,  which  I  have  defined  as  the  larger 
trust  or  trust  for  public  right,  is  always  essentially 
public.  It  is  not  only  industrial  but  political  as 
well.  It  concerns  every  individual  as  a  citizen  in 
the  enjoyment  of  his  equal  political  and  industrial 
rights.  It  thus  immediately  affects  the  whole  public. 
It  arises,  not  from  any  agreement  of  parties,  but  re- 
sults as  a  necessity  fi'om  the  act  of  creation  of  the 
franchise.  In  its  higher  quality  it  is  constant  in  its 
effect  upon  the  right  of  citizenship  and  political 
being,  and  cannot  be  divested  of  this  influence. 
When  we  consider  that  the  chief  motive  of  the 
grantee  of  such  franchise  is  private  profit,  or  profit 
in  which  the  public  or  the  individual  as  a  citizen  of 
the  republic  does  not  directly  partake,  we  discern  in 
this  au  interest  which  is  often  apt  to  be  in  conflict 
with  the  public  right.  It  must  be  plain,  therefore, 
that  such  a  grant  rises  out  of  the  category  of  con- 
tract. There  inheres  in  it  the  reservation  of  the  sov- 
ereign grantor,  which  cannot  be  divested.  The 
incident  of  the  larger  trust  relation  thus  becomes 
vitally  necessary  for  the  preservation  of  the  su- 
preme motive  of  the  grant,  that  motive  being  the 
securing  and  maintaining  of  convenience  in  ac- 
cordance with  and  subject  to  the  equal  right  of  the 


86  INDUSl'RIAL   LIBERTY 

citizen, — a  motive  wliicli  involves  tlie  very  existence 
of  the  republican  State.  The  lesser  trust,  being 
merely  for  private  gain,  must  always  be  held  in 
strict  subjection  to  the  larger.  Any  other  course 
means  the  inevitable  surrender  of  so  much  of  the 
principle  of  political  freedom. 

The  Dartmouth  College  case,  which  will  here- 
after be  more  fully  discussed,  has  become  a 
j)rominent  case  because  it  has  been  industri- 
ously employed  by  the  railway  interest  to  give 
to  the  relation  of  the  State  ^vith  the  corporation  the 
character  of  contract,  with  the  corollary  that  the 
corporation  is  to  be  unrestricted,  as  a  high  contract- 
ing power,  in  the  use  of  the  franchise  once  obtained ; 
in  other  words,  that  this  franchise  is  to  be  con- 
strued in  all  respects  as  a  contract  between  equals. 
To  this  end  that  authority  has  been  wrenched  from 
what  seems  to  me  to  be  its  clear  legitimate  import. 
The  particular  case  itself  involved  only  the  question 
of  a  purely  private  and  eleemosynary  corporation ; 
but  the  railway  interest  has  sedulously  sought,  in 
applying  it  to  railway  corporations,  to  ignore  the 
idea  of  any  public  trust  such  as  I  have  endeavored 
to  show  as  being  inherent  in  the  grant  of  the  fran- 
chise. But  it  will  be  seen,  if  what  I  have  just 
advanced  be  true,  that  such  a  construction  as  the  rail- 
way interest  insists  upon  would  make  the  franchise 
a  gift  of  far  more  power  than  a  republic  could 
possibly  confer, — a  gift  which  by  the  giving  would 
destroy  the  giver, — a  republican  suicide. 


THE   INDUSTRIAL    CORPORATION  Sj 

A  brief  history  of  the  growth  of  the  private  tnist 
relation,  and  of  its  influence  on  industrial  progress, 
will  serve  to  illustrate  more  clearly  the  necessity  for 
the  application  of  the  principles  which  should  gov- 
ern ,  the  larger  relation  to  existing  industrial  con- 
ditions. Throughout  the  history  of  England  the 
abuse  of  custody  was  one  of  the  most  powerful 
hindrances  to  the  progress  of  industry,  until  the 
private  trust  relation  came  to  be  duly  defined  and 
administered ;  thenceforth  this  relation  came  to  be  a 
most  efficient  means  for  the  promotion  of  civilization. 
The  abuse  of  the  private  trust  relation,  whilst  it  was 
unchecked,  created  and  fostered  iniquities  in  the  nar- 
rower scope  of  civilization,  which  grew  to  such  magni- 
tude that  they  were  counteracted  only  by  revolution. 
Nothin2:was  ever  more  insidious  than  the  means  em- 
ployed  by  the  ecclesiastics  of  the  sixteenth  century  for 
absorbing  the  land  of  the  kingdom  by  trust  devices  ; 
nothing  more  adroit  and  cunning  than  the  evasions 
to  which  these  ecclesiastics  resorted  in  sustaining 
their  devices.  Driven  by  legislation  from  the  em- 
ployment of  uses,  they  invented  trusts.  By  one  art 
and  another  they  gradually  absorbed  many  of  the 
best  lands  of  the  kingdom  for  the  service  of  the 
church,  and  thus  impaired  incentive  and  weakened 
industry.  The  first  decisive  blow  which  they  re- 
ceived was  from  Henry  VIIL,  when  this  absolute 
monarch  seized  their  lands  and  divided  them  among 
the  nobles.  This  involved  a  revolution  so  great  as 
to  put  an  end  to  the  power  of  Romanism  in  England, 


88  INDUSTRIAL   LIBERTY 

and  largely  to  secularize  politics.  By  the  lifting  of 
this  burden  a  new  and  marked  era  of  industry  for 
Western  civilization  was  reinau2:urated.  ISTeverthe- 
less  the  Reformation  and  the  appropriation  of  the 
ecclesiastical  domains  at  first  tended  rather  to  con- 
fuse than  to  reorganize  on  a  proper  basis  this  trust 
relation.  The  courts  of  chancery  remained  for  a  con- 
siderable time  mainly  in  the  control  of  ecclesiastics 
and  of  statesmen  who  were  not  lawyers ;  and  it  was 
really  not  until  the  reign  of  Charles  II.  that  the 
trust  relation  became  completely  appreciated  and 
understood.  From  this  time,  so  far  as  private  trusts 
were  concerned,  order  grew  out  of  chaos. 

The  man  who,  as  Lord  Chancellor  Campbell  says, 
is  recognized  in  the  Hall  of  Westminster  to  this 
day  as  "  the  father  of  equity  "  is  Sir  Heneage  Finch, 
afterwards  the  Earl  of  Nottingham.  His  influence 
marks,  with  a  distinct  outline,  an  epoch  in  equity 
jurisprudence.  As  a  chancellor,  he  is  described  by 
Blackstone  as  "  a  person  of  the  greatest  abilities  and 
uncorrupted  integrity ;  and  endued  with  a  pervading 
genius,  that  enabled  him  to  discover  and  pursue  the 
true  spirit  of  Justice,  notwithstanding  the  embarrass- 
ments raised  by  the  narrow  and  technical  notions 
which  then  prevailed  in  the  courts  of  law,  and  the 
imperfect  ideas  of  redress  which  had  possessed  the 
courts  of  equity.  The  reason  and  necessities  of  man- 
kind, arising  from  the  great  change  in  property  by 
the  extension  of  trade  and  the  abolition  of  military 
tenures,  cooperated  in  establishing  his  plan,  and  en- 


THE  INDUSTRIAL    CORPORATION  89 

abled  him,  in  tlie  course  of  nine  years,  to  build  a 
system  of  jurisprudence  and  jurisdiction  upon  wide 
and  rational  foundations." '  Through  his  work  the 
private  trust  relation  has  become  exactly  defined 
and  well  guarded.  As  Chief-Justice  Mansfield  ob- 
serves :  "  Trusts  were  not  on  a  true  foundation  until 
Lord  Nottingham  held  the  great  seal.  By  steadily 
pursuing  from  plain  principles  trusts  in  all  their  con- 
sequences, and  by  some  assistance  from  the  legisla- 
ture, a  noble,  rational,  and  uniform  system  of  law 
has  since  been  raised.  Trusts  are  made  to  answer 
the  exigencies  of  families  and  all  other  purposes, 
without  producing  one  of  those  inconveniences, 
frauds,  or  private  mischiefs  which  the  statute  of 
Henry  VIII.  (chap.  10)  was  intended  to  avoid."  ^  But 
the  accomplishment  was  not  an  easy  one.  Many  of 
those  who  held  relations  as  custodians  resisted  with 
every  device  in  their  power  the  bringing  of  the 
trust  relation  within  more  careful  judicial  investiga- 
tion and  control ;  and  this  resistance  was  largely 
promoted  by  the  jealousies  of  the  lawyers  of  the 
Common  Law.  The  reason  for  the  erection  of 
equity  courts  lay  chiefly  in  the  inadequacy  of  the 
Common  Law  to  bring  relief  from  the  violation  of 
relations  which  the  church  had  created  in  the  form 
of  uses  and  trusts.  Form  was  then  given  by  the 
lawyer,    just    as    it    now    is,    to    the    support    of 

'  "  Blackstone's  Commentaries,"  Book  III.,  p.  55. 

*  Burgess  vs.  Wheate,  i  Eden,  223  ;  Phillips  vs.  Bridges,  3  Ves.,  127  ; 
Kemp  vs.  Kemp,  5  Ves.,  858, 


90  INDUSTRIAL    LIBERTY 

abuses,  while  the  remedy  for  the  correction  of  the 
abuses  was  wanting.  The  evil  had  grown  to  enor- 
mous proportions,  and  heroic  methods  became  neces- 
sary. It  was  by  such  methods  that  the  trust  relation 
at  last  came  to  be  clearly  defined,  so  far  as  that  rela- 
tion concerned  private  estates. 

Among  the  first  guards  thus  thrown  around  the 
private  trust  is  that  of  constant  and  judicial  surveil- 
lance for  the  protection  of  the  interests  of  the  cestui 
que  trust,  and  a  clear  set  of  definitions  of  the  powers, 
duties,  and  liabilities  of  the  trustee.  No  relation  is 
more  clearly  defined  or  more  sacredly  held.  This 
definiteness  rests  upon  the  realization  of  the  destruc- 
tive tendency  which  follows,  of  necessity,  the  per- 
mitting any  one  in  possession  or  control  of  the  prop- 
erty of  another  to  occupy  any  but  the  simplest,  most 
definite,  and  most  direct  relation  of  stewardship  to 
that  property.  It  therefore  excludes  the  possibility 
of  such  a  thing  as  a  dual  relation,  or  the  erection  of 
any  indirect  methods,  whereby  the  trustee  can 
convert  to  his  o^vn  ovniership  any  part  of  the  estate 
which  he  holds  in  the  capacity  of  trustee.  The 
trustee  can  make  no  profit  from  his  possession  or 
control.  He  is  required  to  account  to  the  last  cent 
for  all  that  comes  into  his  hands,  and  all  that  goes 
out  by  way  of  disbursement.  The  influence  which 
the  possession  gives  must  be  used  for  the  advantage 
and  profit  of  the  beneficiary ;  never  in  the  least 
degree  for  the  personal  emolument  of  the  trustee. 
He  may  not  buy  up  debts  against  the  trust  estate.  He 


THE   INDUSTRIAL    CORPORATION  9I 

is  bound  to  use  his  skill  in  behaK  of  the  estate,  nor 
can  he  deal  mth  any  partners  whereby  any  interest 
can  go  indirectly  to  him  as  trustee.  He  can  set  up 
no  adverse  claim  against  the  property.  He  may  be 
liable  to  great  losses  whilst  he  can  receive  no  profits, 
and  this  relation  is  made  stringent,  in  order  that  he 
may  not  be  tempted  from  any  motive  to  embark  the 
trust  fund  upon  the  chances  of  speculation.  His 
accounts  are  made  the  subject  of  careful  judicial 
audit.  No  secrets  can  oppose  themselves  between 
him  and  his  cestui  que  trust,  and  all  malfeasance  is 
treated  as  criminal. 

Thus  the  guards  were  made  adequate  to  govern 
the  trust  relation  as  it  existed  before  the  great  de- 
velopments of  modern  industry.  These  guards  were 
created,  not  by  technical  inspection,  but  as  the 
result  of  structural  analysis.  They  came  from  the 
application  of  principles  to  the  private  relations 
of  trust. 

I  think  it  may  be  confidently  asserted  that  since 
the  great  fundamental  organization  of  trusts  upon  a 
private  basis  was  accomplished  by  the  Earl  of  Not- 
tingham, and  applied  to  those  relations  which  existed 
at  the  time  of  that  organization,  there  has  been  no 
systematic  attempt  to  widen  the  application  of  these 
principles  to  the  enlarged  industrial  and  political 
conditions.  The  work  which  Nottingham  accom- 
plished within  nine  years  has  been  generally  treated 
as  a  completed  work.  It  may  be  said  to  have  re- 
mained almost  crystallized   from   that  time   to    the 


92  INDUSTRIAL   LIBERTY 

present.  The  principles  which  he  established  were 
the  same  then  as  they  are  now  ;  they  have  stood  the 
test  of  time.  Whilst  there  is  not  the  least  occasion 
to  seek  any  change  in  these  principles/ we  need  to 
extend  the  application  of  them  to  the  changed  social 
phenomena,  to  the  more  complex  facts  of  political 
and  industrial  life,  which  have  since  then  come  into 
being.  Nottingham  systematically  applied  organic 
principles  to  the  private  relations  of  trust.  These 
identical  principles  ought  now  to  be  applied  to  the 
industrial  relations  which  are  essentially  public.  As 
we  have  seen,  in  the  private  relation,  where  one 
holds  the  property  of  another,  or  the  power  from 
another  to  exercise  any  right,  such  holder  is  uni- 
versally recognized  by  the  law  as  the  trustee  of  that 
property  or  that  right.  Why  should  the  fact  that 
the  custodian  in  question  is  a  ^/z^^s^'-public  corporation 
confer  immunity  for  the  violation  of  custody  ?  The 
relation  of  custody  which  the  corporate  manager  has 
is  plainly  one  of  trust.  In  private  relations,  a  custodian 
is  held  to  strict  account  for  his  custody,  and  for  the 
performance  of  the  duties  of  that  custody  openly 
and  without  concealment — because  concealment  in  a 
custodian  is  ever  a  badge  of  fraud.  Courts  are 
created  to  enforce  this  performance,  and  the  fail- 
ure of  such  j)erformance  is  made  a  crime.  The 
necessity  for  publicity  is  even  greater  from  the  cus- 
todian of  the  ^^/^j-^-public  corporation,  since  upon 
this  publicity  all  })olitical  right  depends.  Why 
should  we  fail  to  apply  the  same  rules  ?     We  have, 


THE  INDUSTRIAL    CORPORATION  93 

as  I  have  said,  tribunals  to  enforce  the  administration 
of  private  trusts ;  why  should  we  not  erect  tribunals 
competent  to  enforce  the  administration  of  the  public 
trust  ?  AVhy  should  we  not  visit  the  failure  of  per- 
formance with  like  penalties  in  the  one  case  as  in 
the  other  ?  The  intrinsic  qualities  of  custody  exist 
here.  All  of  the  reasons  for  their  recognition  apply 
with  the  fullest  force  in  this  greater  field  which 
modern  industry  has  enlarged  from  the  private  to 
the  public  relation — to  this  public  relation  which  is 
necessarily  by  far  the  more  important,  concerning,  as 
it  does,  not  only  large  material  industrial  interests, 
but  vital  political  rights. 

It  may  be  noted  as  a  rather  curious  fact,  in  illustra- 
tion of  the  half-way  application  of  the  principles  gov- 
ern ino;  trusts,  that  this  limit  of  our  re2:ulation  of  trusts 
to  the  private  I'elation,  this  failure  to  supplement  the 
regulation  of  the  private  custodian  by  the  regulation 
of  the  conduct  of  the  ^^^as^public  custodian,  is  in 
some  sense  the  cause  of  those  flagrant  violations  which 
characterize  the  mismanagement  of  the  interests 
of  the  shareholders  in  the  quasi-^v^vi  corporation. 
The  very  confidence  which  has  grown  up  in  the  com- 
munity through  the  strict  guarding  of  the  private- 
trust  relation,  and  the  honest  performance  of  duties 
which  results  from  such  guarding,  is  a  confidence 
which  has  made  possible  the  violation  of  that 
larger  trust  relation  between  the  corporation  and 
the  public,  which  is  not  so  specifically  guarded. 
Fraudulent  conduct  in  coi'porate  management  flour- 


94  INDUSTRIAL   LIBERTY 

ishes  because  tlie  citizen  has  learned,  tlirougli  con- 
templation of  tliat  trust  in  tlie  private  relation  which 
is  carefully  guarded,  to  place  property  in  the  hands 
of  others  for  custody ;  nothing  can  moi'e  emphasize 
the  necessity  for  extending  the  same  rules  to  the 
coi'porate  relation.  The  very  character  of  such 
frauds  shows  clearly  that,  because  they  become  pos- 
sible, the  moral  obligations  of  which  they  are  the 
breach  must  have  been  more  than  proportionately 
developed.  As  Sir  Henry  Sumner  Maine  says  :  "  It 
is  the  confidence  reposed  and  deserved  by  the  many 
which  affords  facilities  for  the  bad  faith  of  the  few ; 
so  that  if  colossal  examples  of  dishonesty  occur, 
there  is  no  surer  conclusion  than  that  scrupulous 
honesty  is  displayed  in  the  average  of  the  transac- 
tions ^vhich  in  the  j^articular  places  have  supplied 
the  delinquent  with  his  opportunity." ' 

In  conclusion,  I  will  briefly  recapitulate  the  posi- 
tions which  I  have  aimed  to  set  forth  : 

First,  that  inasmuch  as  the  great  object  and  end 
of  free  government  is  to  serve  the  rights  and  promote 
the  happiness  of  the  individual  members,  the  powers 
which  are  delegated  by  those  members  to  that  gov- 
ernment constitute  a  trust  for  the  benefit  of  the 
individuals  by  equal  right ;  and  that  this  trust  is 
paramount  to  all  other  trusts,  public  or  private. 

Second,  that  among  the  delegated  powers  is  that 
attribute  of  sovereignty  in  the  exercise  of  which 
private  property  may  be  taken  for  public  use,  and 

'  "  Ancient  Law,"  by  Sir  Henry  Sumner  Maine,  New  York,  1875,  p.  197. 


INDUSTRIAL    CORPORATION  95 

the  power  to  create  artificial  agencies  to  further 
accomplish  the  ends  of  government ;  and  among 
things  not  delegated,  either  by  the  individual  to  the 
State  government  or  by  the  State  governments  to 
the  Federal  Government,  is  a  power  to  do  anything 
not  in  the  interest  of  all  the  political  units  consti- 
tuting the  people. 

Third,  that  when  government,  in  the  just  exercise  of 
these  functions,  creates  artificial  agencies  for  com- 
mercial purposes,  and  delegates  to  them,  either  by 
necessary  incident  or  directly,  a  portion  of  the  power 
of  the  State,  the  government  thereby  creates  a  public 
trust  which  must  be  administered  in  the  public  inter- 
est ;  and  that  if  such  artificial  agency  attempts  any 
thing  beyond  this,  or  in  contravention  of  the  com- 
mon right,  its  act  is  so  far  ultra  vires  and  void. 

Fourth,  that  such  trust  is  to  be  surrounded  by 
the  same  specific  guards  as  will  secure  the  same 
regard  for  the  rights  and  interests  of  the  individual, 
and  the  sum  of  the  individuals  constituting  the  pub- 
lic cestuis  que  trustent,  as  I  have  pointed  out  in 
relation  to  private  trusts. 

Fifth,  that  the  profits  which  the  State  may  allow 
the  trustee  of  the  larger  trust  to  make  are  essentially 
in  the  nature  of  compensation  for  the  performance 
of  the  duties  of  this  larger  trust ;  and  this  right  to 
compensation  must  always  be  subordinated  to  the 
chief  object  of  that  trust. 

The  recognition  of  these  proj^ositions  I  hold  to  be 
indispensable  to  the  very  existence  of  a  real  repub- 
lican government. 


CHAPTEE  IV 

THE    liELATIOISr    OF    THE    RAILWAY    AND    THE     "  TRUST " 
TO    INDUSTRIAL    LIBERTY 

I  CAisnsroT  better  demonstrate  the  extent  to  wliicli 
our  employment  of  the  corporate  structure  has 
caused  us  to  depart  from  the  spirit  of  our  fundamen- 
tal laws  than  by  instituting  a  contrast  between  the 
theory  upon  which  the  government  grants  a  fran- 
chise and  the  actual  methods  by  which  such  franchise 
is  used.  According  to  democratic  theory,  individual 
and  public  political  right  are  far  more  important 
than  any  convenience  which  a  corporation  can  con- 
fer. The  true  office  of  the  delegate  who  directly 
grants  the  franchise  is,  necessarily  and  always,  that 
of  a  guardian  of  the  right  of  his  constituents,  in 
preserving  this  as  an  equal  right  for  each  of  those 
constituents. 

In  this  guardianship  the  delegate  can  never  act  as 
the  promoter  or  champion  of  any  corporate  fran- 
chise granted  by  him.  According  to  this  theory, 
such  franchise  is  granted  by  these  delegated  guar- 
dians solely  for  the  furtherance  of  equal  public 
convenience.  The  delegated  guardians,  with  an  eye 
single  to  the  public  good,  are  assumed  to  environ 
the  grant  itself  with  strict  limitations,  in  order  that 

96 


THE   RAILWAY  AND    "TRUST"  9/ 

the  powers  granted  shall  not  and  cannot  be  employed 
for  any  tiling  else  than  for  this  public  good  ;  the 
chief  end  being  always  the  furtherance  of  public 
convenience,  and  the  sole  private  interest  granted 
being  the  right  to  reasonable  compensation  for  equal 
service  rendered  ;  and  this,  to  be  reasonable,  must 
always  be  in  subordination  to  the  public  convenience. 
Accordingly,  then,  the  grant  is  made  to  the  indi- 
viduals, not  as  favorites,  but  because  they  are  ready 
to  engage  in  furnishing  a  public  service  in  an  in- 
dustry the  direct  management  of  which  does  not 
lie  within  the  legitimate  province  of  government. 
The  persons  receiving  this  franchise  do  not  in  any 
sense  become  the  absolute  owners  of  any  public  or 
^was^public  right.  The  proper  ownership  is  con- 
fined to  the  capital  which  they  invest  and  to  the 
mechanical  means  which  they  employ.  Their  fran- 
chise is  simj)ly  a  privilege  for  the  employment  of 
these  means.  And  inseparably  coupled  with  that 
use  there  is  a  duty,  not  only  subject  to  the  strict 
construction,  but  also  to  the  continued  and  careful 
control  of  the  creator,  who  can  lose  none  of  his 
power  and  forego  none  of  his  duty  as  custodian  of 
the  permanent  public  right,  in  exacting  performance 
from  the  holders  of  the  franchise.  This  view,  so  far 
as  it  relates  to  the  question  of  ownership  of  railways, 
has  been  often  and  clearly  set  forth  ;  and  never  more 
clearly  than  by  Mr.  Justice  Bradley  in  the  case  of 
Wabash,  St.  Louis,  and  Pacific  Railway  Company  vs. 
Illinois,  in  which  he  says  : 


98  INDUSTRIAL   LIBERTY 

"  The  highways  in  a  State  are  the  highways  of  the 
State.  Convenient  ways  and  means  of  intercommunica- 
tion are  the  first  evidence  of  the  civiHzation  of  a  people. 
The  highways  of  a  country  are  not  of  private  but  of  pub- 
lic institution  and  regulation.  In  modern  times,  it  is  true, 
government  is  in  the  habit,  in  some  countries,  of  letting 
out  the  construction  of  important  highways,  requiring  a 
large  expenditure  of  capital,  to  agents,  generally  corporate 
bodies  created  for  the  purpose,  and  giving  to  them  the 
right  of  taxing  those  who  travel  or  transport  goods 
thereon  as  a  means  of  obtaining  compensation  for  their 
outlay.  But  a  superintending  power  over  the  highways, 
and  the  charges  imposed  upon  the  public  for  their  use, 
always  remains  in  the  government.  This  is  not  only  its 
indefeasible  right,  but  is  necessary  for  the  protection  of 
the  people  against  extortion  and  abuse.  These  positions 
we  deem  to  be  incontrovertible.  Indeed  they  are  ad- 
judged law  in  the  decisions  of  this  court.  Railroads  and 
railroad  corporations  are  in  this  category."  ' 

A  corporation,  tlierefore,  lives  by  permissiou,  and 
only  by  permission,  to  serve  the  public  and  to  fur- 
ther enterprise  for  equal  convenience  ;  and  any  act 
which  disturbs  in  any  way  the  equality  of  this  service 
is  a  usurpation  of  power.  The  delegates  of  the  peo- 
ple granting  the  privilege,  as  the  guardians  of  this 
political  right,  must  not  therefore  be  biassed  in  any 
way  in  behalf  of  the  receivers  of  the  franchise,  and 
they  cannot,  without  dereliction,  acquire  any  active 

'  U.  S.  Supreme  Court  Reports,  Il8,  p.  586. 

Although  this  citation  is  made  from  a  dissenting  opinion  (in  which  Chief 
Justice  Waite  and  Mr.  Justice  Gray  concurred  witli  Mr.  Justice  Bradley), 
the  general  principles  set  forth  are,  as  Mr.  Justice  Bradley  says,  adjudged 
law  in  the  decisions  of  the  Supreme  Court. 


THE   RAILWAY  AND   '' TRUST"  99 

interest  in,  or  exercise  of,  the  powers  conferred  by 
the  franchise.  They  cannot  accept  any  position  of 
agency  or  attorneyship  for  snch  power,  because  ob- 
viously any  relation,  however  slight,  which  commits 
them  to  corporate  influence,  must  in  strict  construc- 
tion be  in  dereliction  of  their  larger  guardianship. 
They  are  guardians  as  representatives  of  that  right 
with  all  which  that  term  imports ;  and  just  so  far 
as  they  disregard  this  I'elatiou,  do  they  lower  the 
pledge  of  their  ofiice  as  representatives  of  their  con- 
stituents. This  relation  is  one  which  admits  of  no 
shades  or  degrees  ;  it  is  all  or  nothing.  As  it  is 
essential  that  the  representatives  should  be  the 
unbiassed  censors  of  the  privilege  which  they  have 
conferred  to  the  corporation  in  trust,  they  should, 
in  the  exercise  of  that  censorship,  require  an  exact 
accounting,  in  all  its  details,  of  the  privilege  which 
they  have  granted.  To  do  this  they  cannot  be  its  ser- 
vants. Even  if  it  were  conceded  that  the  corporate 
idea  were  not  fundamentally  antagonistic  to  the  repub- 
lican idea,  yet  the  interests  of  the  corporate  manage- 
ment and  of  the  corporate  shareholders  are  in  many 
points  too  essentially  different  from  the  interest  of 
the  citizen  to  admit  of  any  double  relation  between 
them.  These  interests  do  not  coalesce,  and  they 
cannot  be  united.  This  was  fully  recognized  when 
Congress,  in  passing  the  Inter-State  Commerce  Act 
providing  for  the  appointment  of  a  commission,  pre- 
scribed that  "  no  person  in  the  employ  of  or  holding 
any  relation  to  any  common  carrier  subject  to  the 


lOO  INDUSTRIAL   LIBERTY 

provisions  of  tliis  act,  or  owning  stock  or  bonds 
thereof,  or  who  is  in  any  manner  pecuniarily  inter- 
ested therein,  shall  enter  upon  the  duties  of  or  hold 
such  office.  Said  Commissioners  shall  not  ens'ao'e 
in  any  other  business,  vocation,  or  employment."  I 
do  not  mean  to  say  that  the  rigor  of  the  rule  extends 
to  the  ownership,  by  the  legislator,  of  stock  or  bonds 
in  a  railway,  or  to  mere  pecuniary  interest  therein. 
Such  interest  may  possibly  not  constitute  a  bias  to 
the  legislative  owner  whose  stock  or  bonds  have 
been  obtained  by  hona  fide  purchase.  The  mere 
owner  of  stock  or  bonds  does  not  by  such  ownership 
owe  any  service  to  the  corporation.  Nevertheless 
this  interest  must  be  the  extent  of  his  relation.  The 
principle  unquestionably  proscribes  the  holding  by 
the  legislator  of  any  office  or  employment  which  in- 
volves a  duty  to  the  corporation,  because  in  this  re- 
lation he  takes  upon  himself  obligations  which  are 
in  essential  conflict  with  his  obligations  as  a  repre- 
sentative of  the  people. 

The  dereliction  of  trust  in  railway  management, 
both  of  the  lesser  or  private  trust  as  well  as  of  the 
greater  or  public  and  industrial  trust,  did  not  spring 
into  sudden  growth  ;  it  was  the  result  of  slow  and  in- 
sidious development.  In  the  more  primitive  stages  of 
railway  management,  when  the  roads  were  shorter, 
and  before  trunk-lines  and  consolidations  had  been 
organized,  the  president  and.  directors  were  chosen 
with  a  view  to  their  fidelity  to  their  office.  Their 
duties  were  then  exercised  under  the  circumspection 


THE   RAILWAY  AND    "  TRUST"  lOI 

of  the  owners  and  shareholders,  and  managed  gener- 
ally for  the  benefit  and  profit  of  those  shareholders ; 
and  thus  the  private  trust,  at  least,  was  preserved. 
The  earlier  derelictions  were  not  those  of  the  minor 
trust  airainst  the  shareholders,  but  consisted  in  viola- 
tions  of  the  larger  public  trust.  In  fact,  they  were 
committed  in  the  interest  of  the  shareholders.  Thus, 
in  Massachusetts,  a  railway  called  the  "Western" 
was  projected  between  Worcester  and  Albany,  to 
open  trade  between  the  AVest  and  Boston.  Seeing 
the  advantage  of  such  facilities  upon  the  general 
prosperity  of  the  State,  the  Massachusetts  Legislature 
advanced  money  and  pledged  the  credit  of  the  State 
to  the  enterprise,  stipulating  that  the  State  should 
have  the  option  of  taking  the  road  from  the  share- 
holders whenever  the  earnings  of  the  road  should 
amount  to  sufficient  to  repay  in  dividends  the  capital 
they  advanced  for  its  construction,  together  with 
seven  per  cent,  interest  from  the  time  it  was  paid  in. 
When  the  road  was  finished  it  was  found,  in  conse- 
quence of  the  wonderful  industrial  growth  of  the 
West,  that  it  commanded  more  business  than  was  an- 
ticipated. Had  the  carrying  ability  of  the  road  been 
increased  in  proportion  to  the  demand  and  worked  to 
its  capacity,  the  conditions  would  have  been  fulfilled 
some  years  before,  and  the  State  would  have  had  the 
right  to  enter  upon  its  possession,  according  to  the 
terms  of  the  charter.  But  it  was  evidently  not  the 
intention  of  the  corporation  to  surrender  such  a  valu- 
able franchise,  so  that  the  road  did  not  increase  its 


I02  INDUSTRIAL   LIBERTY 

carrying  capacity  in  proportion  to  the  demand. 
Keeping  its  rates  higli,  it  actually  turned  business 
from  tlie  West  to  New  York,  and  away  from  Boston. 
Still,  in  S]3ite  of  the  impediments  which  it  placed  in 
the  ^vay  of  the  business  it  was  built  to  promote,  its 
earnings  were  more  than  enough  to  fulfil  the  stipu- 
lated conditions.  This  difficulty  was  met  b}^  one  of 
those  combinations  which  characterize  railway  finan- 
ciering. In  1866  permission  was  obtained  from  the 
legislature  to  increase  the  capital  stock  for  the  pur- 
pose of  improving  the  road.  This  being  done,  a 
dividend  of  two  million  dollars  was  then  made  to 
the  shareholders  without  askins;  a  cent  in  return  ;  but 
the  capital  stock  of  the  road  was  thus  increased  and 
the  rate  of  dividends  lowered  to  the  desired  point. 
This  is  one  of  the  earlier  instances  in  which  railway 
managers  have  shown,  not  only  their  contempt  for 
legislative  control,  and  their  ability  to  direct  it  for 
theii'  own  pur^^oses,  but  also  one  of  their  then  new 
methods  of  financiering — of  creating  fictitious  capital, 
which  is  one  of  their  chief  apj^liances  for  the  increase 
and  control  of  capital  and  for  the  concentration  of 
power.'  But  legal  forms  soon  came  to  be  more 
carefully  thrown  around  all  the  i^ailway  processes. 
As  the  railway  shareholders  increased  in  number  and 
became  scattered  over  Europe  and  America,  and  as 
transfers  in  the  exchanges  became  more  common,  and 
shares  became  market  commodities  to  be  dealt  in  daily, 
the  guards  for  honest  management  became  less  strict. 

^Wesimhistcr  Reviciv,  January,  1S71,  pp.  70  and  71. 


THE   RAILWAY  AND    ''TRUST''  IO3 

In  the  first  stasres  of  tlie  violations  of  the  lesser 
trust,  part  of  the  profits  of  the  roads  ^\^ere  diverted 
from  the  shareholders  by  the  establishment  of  per- 
sonal relations  between  the  manacrers  of  the  road  and 
certain  individual  shippers.  This  was  soon  found  to 
be  too  j^rimitive  and  inefficient  as  a  means  of  mana- 
ging so  large  an  enterprise,  and,  from  the  need  of 
greater  facility  for  accomplishment,  permanent  chan- 
nels were  organized  for  the  diversion,  from  the 
owners  to  the  custodians,  of  the  excessive  profits 
which  resulted  from  the  great  growth  of  industry. 
This  systematic  diversion  proved  to  be  far  more 
profitable,  so  far  as  the  managers  were  concerned, 
than  any  process  of  watering  stock  in  the  interest  of 
shareholders,  or  than  any  other  process  of  accounting 
to  the  real  owners  for  the  excessive  earnings.  The 
new  scheme  of  appropriation  thus  organized  method- 
ically in  due  form  of  law,  I  shall  hereafter  designate 
as  the  parasite,  and  I  will  endeavor  to  give  an  illus- 
tration of  it  by  an  instance  of  its  employment  in  the 
management  of  the  Pennsylvania  Railroad  Company. 

Early  in  the  history  of  this  company,  the  parasit- 
ic corporation  made  its  appearance,  at  first  in  propor- 
tions that  were  not  formidable,  to  appropriate  and 
absorb  the  more  moderate  excess  of  earnings  which 
were  then  made.  A  coal  company  was  formed  upon 
the  line  of  the  road  with  what  would  now  be  called 
a  moderate  capital,  something  less  than  a  million  dol- 
lars. The  land  was  purchased  with  the  proceeds  of 
part  of  the  stock,  and  a  large  proportion  of  the  re- 


I04  INDUSTRIAL    LIBERTY 

mainina:  stock  was  ffiven  to  tlie  active  manasiers  of 
the  Pennsylvania  Road.  Altliougli  a  small  amount 
of  money  was  paid  for  this,  the  main  consideration 
of  the  transfer  was  the  influence  which  these  mana- 
gers promised  and  were  expected  to  exert  in  behalf 
of  the  parasite  coal  company  and  against  any  at- 
tempt at  competition.  Thus  the  substantial  consid- 
eration, so  far  as  the  railway  manager  was  con- 
cerned, consisted  in  the  employment  of  his  fiduciary 
power,  as  a  railway  officer,  for  securing  the  diversion 
of  a  part  of  the  earnings  which  belonged  legitimately 
to  the  shareholders,  from  his  road  into  the  possession 
of  the  parasite  coal  company,  thence  for  re-division 
among  the  shareholders  of  that  parasite.  This,  with 
modifications  suited  to  circumstances,  is  the  basis 
upon  which  every  parasitic  corporation  which  has 
since  been  erected  subsists  and  flourishes.  The 
"  Union  Line  "  was  thereafter  established  upon  the 
Pennsylvania  Poad  and  its  western  connections. 
While  this  company  has  since  acquired  a  large  capi- 
tal and  plant,  its  original  capital  consisted  chiefly  of 
the  power  derived  from  the  illicit  relation  that  I 
have  indicated.  In  other  words,  it  was  organized  at 
first  with  a  capital  based  only  to  a  small  extent  upon 
actual  money,  very  largely  upon  the  earning  power 
derived  from  an  arrangement  with  the  managers  of 
the  road,  by  which  the  profits  of  the  road  were 
diverted  from  the  real  owners. 

There  is  an  assumption  of  convenience  and  effi- 
ciency for  the  office  of  the  parasite  which  is  not 


THE   RAILWAY  AND   "T/^UST"  I05 

without  some  warrant ;  but  tlie  more  I'eal  reason  of 
its  being  lies  in  the  fact  that  it  enables  the  managers 
of  the  road  to  contract  in  their  official  capacity  ^\'ith 
themselves  as  individuals,  and  to  associate  them- 
selves with  the  shareholders  of  the  parasite,  for  their 
individual  profit  and  interest  and  against  the 
profit  and  interest  of  the  owners  of  the  rail- 
way. All  of  their  contracts  tend  indirectly  toward 
absorbing  the  earnings  of  the  railway  corpora- 
tion, and  to  the  advantage  of  the  parasitic  corpora- 
tion. The  regularity  of  organization  of  the  parasite 
is  carefully  secured.  Every  requirement  of  legal 
form  is  punctiliously  observed.  The  whole  arrange- 
ment is  made  to  present  the  exterior  of  an  honest, 
legitimate,  commercial  enterprise.  It  is  assumed  to 
be  an  ally  secured  by  the  officers  of  the  road, 
without  any  other  aim  than  that  of  protecting  and 
promoting  the  interests  of  the  shareholders.  To 
give  the  exterior  of  the  artifice  the  appearance 
of  an  independent  company,  a  number  of  persons 
are  selected  from  the  community  who  are  induced 
to  become  shareholders.  Such  shareholders  are  ex- 
pected to  take  no  part  in  the  management  of  the 
parasite.  They  purchase,  as  investors  on  the  basis 
of  its  earning  power.  These  investors  not  only  give 
it  a  semblance  of  autonomy,  but  also  tend  to  give  it 
a  standing  as  a  legitimate  commercial  enterprise. 

When  these  parasite  corporations  were  first 
organized,  it  was  the  custom  of  the  president 
of    the   railway   company,    in    his   address   to   the 


I06  INDUSTRIAL   LIBERTY 

Bhareliolders,  to  set  fortli  the  difficulties  wliich 
lie  encountered  iu  securing  the  organization  of  the 
ancillary  company  to  do  the  necessary  and  arduous 
work  of  furnishing  business  for  the  railway.  He 
congratulated  the  shareholders  upon  his  success  in 
securing  this  co-operation  and  the  great  advantage 
that  resulted  thereby  to  these  shareholders.  The 
assumed  necessity  of  the  ancillary  corporation  for 
bringing  traffic  to  the  road  was  especially  dilated 
upon,  and  an  exaggerated  intimation  was  given  of 
the  investments  which  were  made  in  this  ancillary 
corporation,  in  whatever  stock  it  may  have  had  in 
cars  or  otherwise.  The  fact  that  some  investments 
were  made  in  the  parasite  stock  by  those  who  had 
nothing  to  do  with  its  management,  was  set  forth  as 
indicating  the  interest  which  the  public  took  in 
sustaining  the  enterprise.  But  in  all  this  showing  of 
the  president  there  was  a  careful  concealment  of 
those  interests  and  affiliations  between  the  raihvay 
managers,  for  their  personal  interests,  and  the  para- 
site, a  concealment  of  that  which  constituted  the  real 
motive  of  the  president  for  furthering  the  organiza- 
tion. 

It  is  impossible  that  the  shareholders  of  the  rail- 
way could  have  realized  at  the  beginning  the  secret 
relations  which  thus  existed  between  the  parasite 
and  the  managers  of  the  road.  To  assume  this 
would  be  to  assume  that  these  shareholders  could 
have  said  in  terms  to  the  president  of  the  road : 

"  We  agree  that  your  salary  shall  be  $25,000  per 


THE  RAILWAY  AND   "TRUST"  lOy 

annum,  but  we  do  not  exact  from  you  on  account  of 
this  payment,  fidelity  to  our  interest.  You  may 
manage  our  propert}"^  in  such  a  way  as  to  reahze  the 
largest  profit  you  can  exact  from  the  public.  As 
this  may  be  limited  by  competition  with  rival 
companies,  you  may  compensate  the  limitation  by 
making  exactions  upon  patrons  Avho  live  at  local 
points.  As  you  may  have  the  opportunity  arising 
from  the  great  growth  of  industry  to  realize  vastJy 
more  than  will  be  suflicient  to  pay  the  interest  on 
the  bonded  indebtedness  and  moderate  dividends  to 
us  as  shareholders,  you  may  so  adjust  your  contracts 
with  parasitic  corporations,  in  which  you  are  allowed 
to  be  the  chief  shareholder,  as  to  appropriate  to 
yourself  and  your  associates  all  that  may  be  acquired 
in  excess  of  the  interest  on  the  indebtedness  and 
moderate  dividends  to  be  paid  to  us.  The  only  fur- 
ther suggestion  we  have  to  make  is  that  you  observe 
in  all  this  strict  compliance  with  legal  forms.  Un- 
der such  compliance  you  may  violate  your  trust, 
your  custody,  your  faithfulness  to  our  ownership, 
and  make  whatever  distribution  you  may  be  pleased 
to  make  with  your  associates  under  the  rule  of  '  addi- 
tion, division,  and  silence.' " 

If,  therefore,  the  shareholders  gave  to  the  man- 
agers the  power  which  in  fact  those  managers  have 
used,  we  must  assume  that  they  deliberately  in- 
tended to  confer  upon  the  railway  presidents,  direc- 
tors, and  their  associates,  not  only  the  power,  but 
the  privilege  of  a  systematic  and  enormous  appro- 


I08  INDUSTRIAL    LIBERTY 

priation  of  property  wliicli  did  not  belong  to  tliem,  and 
that  these  shareholders  further  deliberately  intended 
to  treat  this  malversation  as  a  species  of  business 
sa2:acitv,  if  not  of  virtue.  Sane  men  do  not  thus  re- 
gard  their  rights  of  ownership.  In  point  of  fact,  the 
shareholders  at  the  bemnnino;  did  not  know,  and 
could  not  have  known,  the  real  functions  of  the  para- 
site. They  judged  of  its  character  by  the  official 
pi«esentation  of  its  formal  exterior,  not  from  a  full 
knowledge  of  its  secrets.  As  they  were  inclined 
only  to  expect  regular  dividends,  they  were  not  in- 
clined to  be  critical.  Indeed,  as  many  of  them 
were  non-residents  and  foreigners,  they  Avere  unac- 
quainted with  the  manner  of  conducting  the  details 
of  the  business.  Moreover,  the  facility  for  dealing 
in  shares  afforded  by  the  markets  gave  to  the  own- 
ership of  stock  a  migratory  and  transitory  character, 
which  did  not  conduce  either  to  criticism  or  exami- 
nation. Then  also,  there  was  the  pretext  of  compe- 
tition with  other  roads  to  limit  apparent  earnings; 
and,  added  to  all  this,  the  railway  management  was 
regarded  as  something  vast,  profound,  inscrutable, 
and  not  to  be  measured  by  ordinary  rules  of  busi- 
ness ;  or  to  be  held  amenable  to  critical  examination. 
As  for  the  general  public,  it  was  so  gratified  with 
the  new  material  conveniences  that  it  showed  but 
little  disposition  to  make  critical  incpiiry  into  the 
processes.  Any  idea  of  aggression  upon  political 
rights  was  not  thought  of  in  connection  with  the 
railway  management,  and  the  public  were  inclined 


THE   RAILWAY  AND   ''TRUST"  IO9 

to  regard  tliat  management  as  a  matter  of  private 
control.  It  "was  under  these  circumstances  that  the 
parasites  were  organized,  grew,  and  refined  their  pro- 
cesses. By  degrees  their  managers  acquired  that 
skill  by  which  they  measured  the  amount  which 
it  was  necessary  to  allow  to  the  railway  company 
for  moderate  dividends  to  the  shareholding  owners, 
and  for  interest  on  the  bonded  indebtedness ;  and 
this  in  some  instances,  at  least,  was  the  extent  of 
the  profits  which  they  permitted.  It  was  an  essen- 
tial part  of  the  system,  that  all  of  the  betterments 
and  permanent  improvements  of  the  railway  were  to 
be  made  by  new  demands  from  the  owners  and  the 
issue  of  new  stock.  Thus  the  great  bulk  of  the 
receipts  coming  from  the  growth  of  the  industry 
was  sent  through  the  secret  channels  erected  at  the 
termini  of  the  road  for  exacting  tribute,  not  only 
from  the  road,  but  through  discriminations  from  the 
public  also. 

Under  these  conditions  and  by  this  management, 
a  few  individuals  at  the  head  of  leading  railroads 
have  arisen  from  obscurity  into  immense  affluence 
and  power.  These  men  are  not,  in  general,  engaged 
in  any  manufacturing  or  commercial  enterprise. 
Their  whole  occupation  has  consisted  in  direct- 
ing and  managhig  these  artifices  of  appropriation. 
And  yet  their  malversation  has  made  them  prosper- 
ous and  wealthy  far  beyond  the  wealth  and  pros- 
perity of  the  men  who  have  pursued  the  most 
profitable  lines  of   regular  industry.     The   railway 


no  INDUSTRIAL   LIBERTY 


president,  in  association  witli  them,  has  realized 
many  times  the  amount  of  his  large  salary  by  sys- 
tematically depleting  a  property  which  he  was  cho- 
sen as  tlie  guardian  to  protect. 

I  will  not  presume  to  sit  in  judgment  upon  any  of 
these  actors  as  individuals.  I  kno^v  that  many  of 
them  in  their  family  and  social  relations  are  exem- 
plary citizens ;  and  personal  attacks  are  an  unworthy 
and  an  irrelevant  resort  in  any  effort  to  discuss  a 
serious  economic  problem.  When,  therefore,  I  at 
any  time  have  cause  to  speak  of  persons,  it  is  not 
with  the  thought  of  making  personal  charges  or  of 
pointing  out  individual  peculiarities,  but  because 
they  happen  to  be  related  to  a  problem  which 
is  the  subject  of  discussion.  Besides,  as  I  shall 
endeavor  hereafter  to  show  more  specifically, '^  the 
responsibility  for  this  condition  is  a  divided  one. 
What  is  constantly  to  be  borne  in  mind  is  that 
we  are  considering  an  artificial  system ;  a  system 
which  has  arisen  out  of  the  state  of  the  law,  the 
tendency  of  the  public  to  construe  that  law,  and 
the  condition  of  the  public  opinion  from  which  the 
law  is  born.  I  do  not  mean,  of  course,  that  individ- 
uals are  not  accountable.  But  as  I  believe  part  of  the 
responsibility  for  this  system  rests  with  the  public. 

There  is  one  corollary  which  I  cannot  forbear 
mentioning  here,  although  I  will  consider  it  more 
fully  in  a  later  part  of  this  work.  It  is,  that  tlie  per- 
sistent and  successful  disregard  for  public  and  pri- 

'  Chapter  VII. 


THE  RAIL  WA  Y  AND   "  TRUST"  1 1 1 

vate  right  manifested  by  the  railway  manager  needs 
to  be  considered  in  its  influence  on  such  organi- 
zations as  the  Knights  of  Labor.  When  we 
note  that  the  highest  guerdon  of  success  has  ac- 
companied the  methodical  appropriation  by  the 
trustee  and  guardian  of  the  property  of  others,  and 
that  the  power  obtained  through  the  corporate  struc- 
ture has  been  employed  for  trampling  upon  the  right 
of  private  ownership  and  the  sanctity  of  contract, 
may  we  not  in  these  acts  find  all  that  inspires  the 
Knights  of  Labor  to  disregard  the  rights  of  private 
ownership  and  the  sanctity  of  contract  ?  Whilst  the 
laborer  may  not  reason  accurately  upon  all  the  de- 
tails, he  cannot  fail  to  feel  instinctively  the  salient 
consequences  which  lie  all  around  him ;  he  cannot 
fail  to  see  that  the  j^reatest  of  the  fortunes  that  have 
been  heaped  up  within  the  past  twenty  years  owe 
their  being,  not  to  the  creation  of  industry,  but 
to  a  species  of  legerdemain  through  which  the  fruits 
of  other  ownership,  held  in  trust,  have  been  trans- 
ferred to  these  custodians.  If  men  j^laced  in  charge  of 
property  under  ^vhat  ought  to  be  held  as  the  sacred 
obligations  of  custody,  appropriate  that  property  to 
themselves,  why  may  not  the  laborer,  who  has  no 
such  nice  obligation,  disregard  the  law  of  ow^nership 
in  a  less  desfree?  When  the  fundamental  truth 
shall  be  firmly  grasped  and  held,  that  the  guardian 
of  the  property  of  another  cannot  oppropriate  that 
property  to  himself,  the  Knight  of  Labor  will  have 
less  reason  for  his  own  more  violent  but  less  insidi- 


1  I  2  IND  US  nil  A  L   LIBER  T  V 

ous  denial  of  ownersliip,  in  which  there  is  no  trust 
relation  involved. 

AVhen  we  come  to  realize  this  we  shall  be  enabled 
to  conclude  that  the  railway  problem  is  not  one 
which  involves  simply  the  mechanical  and  ministe- 
rial management  of  railway  facilities,  nor  one  which 
is  to  be  judged  by  mere  regularity  of  form.  We 
shall  find  it  necessary  to  go  behind  the  form  of 
things,  however  regular  and  legal  they  may  be,  and 
to  search  out  the  heart  of  the  mystery  by  determined 
examination  of  the  structure.  When  we  reach  this 
point  in  the  line  of  progress,  I  think  we  shall  also 
find  that  neither  the  assumption  of  enterprise  of  the 
railway  j)arasites,  nor  the  philanthropy  of  those  who 
condone  these  corporate  practices,  can  convert  the 
essential  wrong  by  which  the  acquisitions  are  made 
into  sound  morals,  or  make  it  accord  with  indi- 
vidual political  right.  We  shall  find,  moreover,  in 
the  parasites  the  chief  causes  ^vhicll  have  brought 
into  beino;  the  Knio-hts  of  Labor  and  such  artificial 
alliances  as  those  of  Communism  and  Socialism. 

I  have  thus  given  instances  of  the  parasite  in  the 
Pennsylvania  Railroad  management.  These  may 
serve  as  illustrations  of  the  genesis  of  the  whole 
system,  since  the  parasite  corporation,  wherever  used 
on  the  railways,  involves  the  same  kind  of  derelic- 
tion. In  its  simpler  forms  it  varies  only  in  the  de- 
tails surrounding  its  use. 

Among  the  four  trunk-lines  to  the  seaboard,  the 
Baltimore  and  Ohio  Railway  Company  is  the  only 


THE   RAILWAY  AND   ''TRUST"  II3 

one  wliicli  Las  not  made  use  of  this  device  for  the 
division  of  sliareliolders'  profits.  The  manner  in 
whicli  these  four  trunk-lines  have  been  conducted, 
and  the  result  of  their  management  in  building  up 
the  fortunes  of  the  managers,  may  be  shown  by  a 
brief  reference  to  the  characteristics  of  each. 

The  managers  of  the  Baltimore  and  Ohio  have 
exacted  from  their  local  patrons,  even  more  rigor- 
ously than  any  of  the  other  lines,  "  all  that  the  traf- 
fic would  bear."  Their  policy  has  generally  been 
quite  as  selfish  as,  and  more  narrow^  than,  that  which 
marked  the  management  of  any  of  the  other  trunk- 
lines.  Thus,  for  instance,  they  did  not  Avait  to  be 
driven  by  destructive  competition  with  other  roads, 
to  recoup  themselves  by  exacting  excessive  tribute 
from  local  patrons.  On  the  conti'ary,  at  times  when 
such  competition  did  not  exist,  they  carefully  meas- 
ured the  capacity  of  local  industries  along  the  line 
of  the  road,  and  took  all  save  so  much  as  would  al- 
low those  industries  to  exist.  They  never  enter- 
tained for  a  moment  the  policy  of  fostering  local 
trafhc,  but  pursued  their  exactions  as  a  system.  In 
consequence  of  this  these  local  industries  along  the 
line  of  the  Baltimore  and  Ohio  road  are  fewer  and 
feebler  than  those  along  any  other  of  the  trunk-lines. 
But  I  do  not  think  these  managers  ever  created  a  par- 
asitic corporation  for  the  purpose  of  diverting  earn- 
ings from  shareholders.  In  this  respect  they  form  the 
single  exception  among  the  trunk-lines.  The  sum 
of  all  their  exactions  w^nt  to  the  shareholders.     On 


I  1 4  IND  US  TKIA  L   LIBER  T  Y 

this  account,  notwithstandiDg  tlie  narrowness  of  the 
policy  of  these  managers,  and  in  spite  of  the  fact 
that  they  have  been  outwitted  by  the  managers  of 
the  competing  trunk-lines  in  almost  every  direct  con- 
test, still  they  have  paid  the  full  earnings  of  the  road 
to  the  shareholders,  in  large  dividends,  and  thus  they 
have  maintained  a  much  higher  market  value  for 
their  stock  than  any  of  their  more  energetic  compet- 
itors; while  the  fortunes  of  these  individual  man- 
agers, having  been  in  the  main  more  legitimately 
made,  through  their  interest  in  the  road  as  share- 
holders, are  therefore  not  comparable  in  bulk  to  those 
that  the  manasrers  of  the  other  lines  have  amassed. 

The  Pennsylvania  Railroad  management  was  a 
different  thing.  By  the  formation  of  a  number  of 
parasitic  corporations  and  the  alliance  of  the  mana- 
gers with  them  for  the  abstraction  of  earnings,  they 
distributed  their  illicit  profits  and,  by  this  distribu- 
tion, diffused  the  sum  of  these  among  a  considerable 
number.  Their  illicit  fortunes,  therefore,  being  thus 
distributed,  did  not  amount,  in  the  particular  case  of 
any  one  of  these  managers,  to  more  than  ten  or 
twelve  millions  of  dollars. 

The  characteristics  of  the  New  York  Central 
Railway  management  were  that  tliose  in  control  had 
fewer  associates  for  division  of  diverted  profits.  The 
managers  skilfully  linked  roads  together  and  formed 
a  trunk-line;  depressed  the  values  of  contributing 
roads ;  seized  the  ownership  of  these  roads  and  con- 
verted them  into  parasites  for  wholesale  diversion. 


THE   RAILWAY  AND    "TRUST"  11$ 

always,  however,  as  strictly  as  possible  under  the 
forms  of  law.  The  illicit  profits  from  all  sources 
flowed  into  one  reservoir  and  made  tlie  bulk  of  accu- 
mulation, in  the  instance  of  the  Vanderbilt  manage- 
ment, the  most  enormous  individual  accumulation 
which  this  country  has  ever  witnessed. 

The  niana2:ement  of  the  Erie  Railwav,  a2:ain,  was 
different  from  any  of  the  others ;  for  with  all  of  the 
others,  as  I  have  said,  there  was  a  careful  compli- 
ance with  the  forms  of  law.  These  managers  got 
possession  of  the  road,  not  with  the  consent  or 
wishes  of  the  owners,  but  by  a  trick ;  and  they 
thereupon  engaged  in  a  process,  of  "svhat  Mr.  Adams 
calls  "  commercial  freebooting."  They  manipulated 
legislatures,  and,  with  the  assistance  of  two  New 
York  judges,  to  whose  courts  they  referred  the  own- 
ers of  the  road  and  the  outraged  public,  they  main- 
tained their  possession  and  control ;  they  proceeded 
to  lay  under  tribute  the  whole  community  and  every 
public  and  private  interest  Avithin  their  reach.  They 
made  wars  of  the  most  destructive  competition  with 
the  competing  trunk-lines.  They  illustrated  the 
anomaly  of  a  bankrupt  road,  in  the  possession  of 
"  skilful  robbers,"  that  was  stronger  for  the  pur230ses 
of  diversion  than  were  the  solvent  roads.  The  mana- 
gers of  the  bankrupt  road  acknowledged  allegiance 
to  no  one,  and  rendered  no  account  to  shareholders, 
but  at  times  appropriated  every  thing;  while  the  man- 
agers of  the  solvent  roads  were  under  the  necessity 
of  paying  some  part  at  least  of  their  revenues  to 


Il6  INDUSTRIAL  LIBERTY 

meet  tlie  interest  on  the  bonded  indebtedness  and  to 
make  moderate  dividends  to  the  shareholders.  Even 
when  this  road  was  finally  wrested  from  its  mana- 
gers, the  surrender  was  made  by  them  the  occasion 
of  a  gigantic  manipulation  upon  the  market  in  Erie 
shares,  to  the  immense  profit  of  the  managers  and  to 
the  corresponding  loss  of  the  public.  Although  the 
power  thus  used  under  the  corporate  structure  was 
enormous,  these  men  took  desperate  chances,  and 
their  accumulations  therefore  are  difficult  even  to  es- 
timate. 

It  will  thus  be  seen  that  the  managers  of  each  of 
these  roads,  except  the  Baltimore  and  Ohio,  have,  al- 
though with  a  different  use  of  the  parasite,  accom- 
plished substantially  the  same  end — viz.,  the  secret 
diversion  of  profits  from  the  owners  of  the  roads  to 
themselves.  The  managers  of  each  of  these  roads, 
including  the  Baltimore  and  Ohio,  have,  although  with 
a  different  use  of  the  corporate  pov/er,  accomplished 
the  like  purpose  of  steadily  pushing  the  aggressive 
interest  of  the  railway  to  the  sacrifice  of  the  politi- 
cal right  of  the  community. 

Until  about  1870  the  profits  of  the  parasite  on 
each  of  the  separate  railways  were  restricted  by  the 
competition  from  similar  parasites  upon  the  com- 
peting lines.  The  projectors  of  the  "  Standard  Oil 
Trust"  elaborated  this  simpler  condition.  They 
erected  a  structure  by  which  they  coupled  all  of  the 
secret  interests  of  the  managers  of  the  several  trunk- 
lines,  so  far  as  their  interests  referred  to  the  shipment 


7'ITE   RAIL  IV A  V  AND    "  TRUST  "  WJ 

of  petroleum.  They  thus  made  a  basis  for  division 
of  the  profits  of  this  product  between  one  great  para- 
site and  the  managers  of  the  different  railways.  By 
this  device  all  competition  which  formerly  existed 
between  the  parasites  of  the  different  trunk-lines  was 
overcome  through  consolidation.  Nothing  less  than 
this  would  o'ive  such  exclusive  control  as  would 
throttle  all  of  the  competition.  From  this  design  the 
"  Standard  Oil  Trust "  came  into  being.  The  growth 
was  thus  from  the  simple  parasite  to  the  complex 
parasite.  This  involved  the  seizure  of  a  whole  in- 
dustry. The  petroleum  industry  afforded  a  peculiar 
opportunity  for  this  scheme.  The  production  of  oil 
was  confined  for  a  long  time  to  a  limited  area,  prin- 
cipally within  the  State  of  Pennsylvania.  It  was 
thus  susceptible  of  being  seized  and  held  in  exclu- 
sion. What  added  to  the  opj^ortunity  for  monopoly 
was  the  uncontrolled  rivalry  Avhich  prevailed  among 
the  producers  of  oil  themselves — a  rivalry  which 
always  characterizes  a  mining  field.  The  producers 
were  stimulated  to  excessive  competition  in  the 
hope  of  large  discovery.  The  exclusive  control  of 
the  carrying  of  their  product  by  means  of  a  pipe- 
line, the  alliance  of  this  line  with  the  railway  man- 
agers, and  a  monopoly  held  by  the  "Trust,"  ren- 
dered these  producers  an  easy  prey  to  any  exactions 
which  this  monopoly  might  choose  to  make.  Thus 
a  whole  industry  was  seized.  Tliis  "  Trust,"  stand- 
ing between  the  producer  and  the  consumer,  and 
through  alliance  with  the  railway  managers  control- 


Il8  INDUSTRIAL   LIBERTY 

ling  the  only  means  of  coramunication,  proceeded  to 
exact  from  both  producer  and  consumer  the  largest 
possible  margin  and  to  hold  the  industry  in  its 
grasp.  Involved  in  this  seizure,  also,  there  was 
the  taking  from  the  railways  in  rebates  a  large  part 
of  their  legitimate  earnings.  These  were  paid  to 
the  complex  parasite,  tliereafter  to  be  divided  between 
the  organizers  of  the  parasite  and  the  managers  of 
the  railways. 

The  organization  of  the  "Standard  Oil  Trust" 
itself  has  been  a  gradual  growth.  .  Viewing  it  from 
the  beginning,  its  capitalization  has  to  a  compara- 
tively small  extent  been  made  with  money — to  a 
very  large  extent  with  power.  The  actual  amount 
of  money  employed  as  the  nucleus,  considering 
its  present  magnitude,  was  very  moderate.'  The 
actual  amount  which  it  now  has  in  capital  and 
plant  is  nearly  all  derived  from  the  past  employ- 
ment of  its  power.  The  real  capitalization,  there- 
fore, consists  in  more  than  iifty  corporate  structures, 
whose  franchises  are  derived  from  the  different 
States,  and  in  the  power  emplo^^ed  by  means  of  the 
control  of  these  structures  in  the  unity  of  the 
"Trust."  The  wealth  of  Wq  "Trust"  is  estimated 
upon  the  market  by  its  dividend-paying  capacity. 

'  Mr.  Hudson,  in  his  work,  "The  Railways  and  the  Republic"  (New 
York,  1886,  p.  6S),  slates  tlie  amount  of  the  first  actual  investment  as 
$300,000.  In  the  testimony  of  H.  M.  Flagler,  one  of  the  officers  of  the 
"Standard  Oil  Trust,"  given  before  the  Committee  on  Manufactures  of 
the  House  of  Representatives,  April  27,  18S8,  it  is  stated  that  the  first  cor- 
poration from  which  the  "  Trust  "  eventually  grew — the  Standard  Oil  Com- 
pany of  Ohio — was  organized  in  1870,  and  was  capitalized  at  $1, coo, 000. 


THE  RAILWAY  AND   ''TRUST"  IIQ 

The  "  Trust "  certificates  wliicli  are  issued  to  repre- 
sent its  capital  bear  such  a  market  price  as  yields 
the  investor  six  or  eight  per  cent,  per  annum  in 
dividends  or  interest.  Its  capital  by  this  estimate  is 
over  one  hundred  million  dollars,  but  its  plant — its 
capital  in  money, — including  its  accuuiulations,  enor- 
mous as  these  are,  is  really  not  more  than  one  third 
of  that  amount.' 

In  the  early  days  of  the  progress  of  this  monopoly 
it  had  a  far  closer  alliance  with  the  managers  of  the 
Erie  Railway  than  with  those  of  any  of  the  other 
trunk-lines.     Indeed,  it   may   be  said  that  its   first 

'  J.  F.  Hudson,  in  his  work  on  "  The  Railways  and  the  Republic,"  p.  84, 
infers  "  that  the  rebates  paid  the  '  Standard  '  during  the  period  of  its  growth 
from  an  ordinary  corporation  to  a  complete  monopoly  were  equal  to  its 
entire  increase  of  wealth  for  that  time.  In  other  words,  its  entire  profits 
were  comprised  within  the  discriminations  made  in  its  favor  by  the  railways." 
Whether  this  inference  is  entirely  correct  or  not,  it  is,  of  course,  impossible 
to  say.  "  The  first  legal  avowal  of  its  rates  was  in  the  case  of  H.  L. 
Taylor  et  al.  vs.  The  Standard  Oil  Company,  in  which  it  was  alleged  by 
the  plaintiff  that  a  rebate  of  %\  per  barrel  had  beea  paid  by  the  railways  to 
the  '  Standard. '  The  reply  of  the  '  Standard  '  admitted  a  payment  of  rebate, 
but  denied  that  it  was  of  the  amount  named."  (See  "  The  Railways  and  the 
Republic,"  p.  84.)  It  is  further  developed  in  the  examination  of  Mr.  A. 
J.  Cassatt,  third  vice-president  of  the  Pennsylvania  Railroad,  as  a  witness 
in  the  case  of  The  Commonwealth  vs.  The  Pennsylvania  Railroad  et  al., 
before  the  Master  appointed  by  the  Supreme  Court  of  Pennsylvania,  in  1S79 
(see  printed  testimony  in  this  case,  pp.  661-737),  that  rebates  were  given 
by  the  Pennsylvania  Railroad  and  its  connections  to  the  Standard  Oil  Com- 
pany (which  is  identical  with  what  is  now  known  as  the  "  Standard  Oil 
Trust  "),  varying  from  4g|-  cents  to  64J-  cents  per  barrel  of  crude  petroleum, 
for  shipments  from  the  oil  regions  to  the  seaboard,  the  difference  in  the 
amount  of  rebate  being  due  to  the  difference  in  the  points  of  shipment  and 
destination  ;  that  the  Pennsylvania  Railroad  began  paying  these  rebates  in 
Feb.,  1S7S,  and  was  still  paying  them  at  the  time  Mr.  Cassatt's  testimony 
was  given  (March,  1S79).  Mr.  Cassatt  also  testified  that  an  additional  re- 
bate of  2i\  cents  per  barrel  had  been   regularly  paid  to  the  American 


I20  INDUSTRIAL   LIBERTY 

growth  is  due  to  association  witli  the  management  of 
this  road.  The  immense  leverage  afforded  by  a 
bankrupt  railway  in  possession  of  ''  freebooters " 
was  used  with  all  its  force  to  compel  where  it  could 
not  induce  illicit  arrangements  between  the  parasite 
and  the  trunkdines,  and  the  result  was  that  the 
alliance  became  complete  with  all  these  trunkdines 
except  the  Baltimore  and  Ohio  Railway.  AYith  the 
managers  of  the  Baltimore  and  Ohio,  who,  as  we 
have  seen,  accounted  for  all  the  earnings  of  the  road 
to  the  shareholders,  the  parasite  was  compelled  to 
make  special  terms  in  accordance  with  the  policy  of 

Transfer  Company,  one  of  the  companies  belonging  to  the  Standard  Oil 
Company,  as  a  "  commission,"  and  that  this  sum  was  paid  to  the  Standard 
Oil  Company  not  only  upon  shipments  made  by  the  Standard  Oil  Company, 
but  upon  all  shipments  of  petroleum  made  by  any  shipper.  Mr.  Cassatt,  as 
a  witness,  also  expressed  the  belief  that  the  other  trunk-lines  paid  to  the 
Standard  Oil  Company  the  same  rebates  and  "  commissions." 

When  we  consider  that  the  shipments  of  crude  oil  from  the  oil  regions  to 
the  seaboard  for  the  year  187S  averaged  something  more  than  20,000  bar- 
rels per  day  in  crude  equivalent  (see  testimony  in  this  case  of  Samuel  F. 
Stowell,  pp.  124-251),  and  that  of  this  the  Standard  Oil  Company  shipped 
at  least  80  per  cent.,  or  16,000  barrels  per  day,  we  may  infer  that  if  upon 
these  shipments  that  company  received  even  72  cents  per  barrel  in  rebate 
and  "  commission,"  the  total  sum  thus  received  from  the  trunk-lines  daily 
would  be  $11,520,  or  for  the  year,  estimating  it  at  300  days,  $3,456,000. 
This  sum,  of  course,  does  not  include  any  rebates  paid  by  any  other  than 
the  trunk-lines  to  the  seaboard,  and  therefore  does  not  indicate  any  rebates 
which  may  have  been  received  by  the  Standard  Oil  Company  from  any  of 
the  Western  or  Southern  roads. 

But,  whatever  the  exact  amounts  may  be,  there  is  developed  in  this  testi- 
mony the  character  of  the  scheme.  Obviously  there  is  nothing  in  these 
methods  which  will  entitle  the  "  Standard  Oil  Trust  "  to  claim  the  creation 
of  an  industry.  It  is  an  artifice  for  the  subjeclion  of  one,  for  the  appropri- 
ation of  the  energy  and  property  of  others.  It  is  thus  a  huge  illegitimate 
taxing  machine  for  levying  contribution  from  an  industry  and  from  the 
railways. 


THE   RA IL  IV A  V  A  ND    ' '  TR  US  T"  121 

that  road.  But  with  the  managers  of  the  other 
trunk-lines  its  relations  were  not  only  complete  but 
profoundly  seci-et.  To  illustrate  the  manner  in 
which  the  absorption  grew  to  completion,  let  us 
take  its  relations  with  the  managers  of  the  Pennsyl- 
vania Kailroad  Company.  This  railway  company 
possessed  an  exceptional  advantage  over  all  of  the 
other  trunk-lines  in  the  fact  that  the  oil-producing 
industry  was  nearly,  if  not  exclusively,  limited  to 
the  State  of  Pennsylvania,  and  thus,  geographically, 
to  a  large  extent  within  easier  reach  of  the  Pennsyl- 
vania Railroad  than  any  other.  For  a  time  the  man- 
agers of  this  road  availed  themselves  of  this  ad  van- 
tage,  and  in  the  earlier  history  of  the  oil  develop- 
ment established  their  own  particular  parasites  for 
diverting  the  profits  from  the  shareholders  of  their 
own  road  to  themselves.  These  parasites  were 
known  as  the  "Empire  Transportation  Company," 
which  had  some  capital  in  tank  cars,  and  the 
"  Union  Pipe  Line,"  located  in  the  oil  fields,  with 
tanks  and  line  for  receiving  and  storing  oil  and  de- 
livering it  from  the  wells  to  the  railway  stations. 
They  were  for  a  long  time  the  exclusive  carriers  of  oil 
upon  the  Pennsylvania  road,  and  effectually  exerted 
their  usual  functions  of  diverting  the  larger  part  of 
the  profits  of  carriage  from  the  shareholders  of  the 
road  to  the  managers.  But  the  managers  of  the 
"  Standard  Oil  Trust  "  at  length  gained  even  a  closer 
alliance  with  the  managers  of  the  Pennsylvania 
Kailroad  than  that  which  existed  between  those  man- 


122  INDUSTRIAL   LIBERTY 

agers  and  their  own  parasites;  and  in  1877  tliese  lo- 
cal parasites,  the  "  Em2:)ire  Line "  and  the  "  Pipe 
Line,"  were  compelled  at  the  command  of  the  rail- 
way managers  to  capitulate  to  the  larger  parasite, 
the  "  Standard  Oil  Trust,"  The  capitulation  was  se- 
cured upon  rather  easy  terms  to  the  minor  parasites.' 
The  few  outside  shareholders  (those  who  were  not 
in  the  management,  but  had  purchased  their  shares 
for  value  upon  the  basis  of  the  earning  power  of 
the  parasite)  were  simply  informed  that  the  corpora- 
tions were  dissolved.  These  outside  shareholders 
were  paid  something  like  fifteen  dollars  per  share 
premium  upon  their  stock ;  and  thereupon  the  new 
and  complex  parasite,  the  "  Standard  Oil  Trust,"  took 
the  place  of  the  old  and  simpler  parasites,  and  the 
control  was  complete.^ 

'  Testimony  of  Joseph  D.  Potts  before  the  Committee  on  Manufactures 
of  the  House  of  Representatives,  April  27,  18S8. 

"^  The  capitulation  of  these  minor  parasites  to  the  "  Standard  Oil  Trust  " 
was  not  accomplished  without  a  severe  contest  and  a  war  of  rates  between 
the  New  York  Central,  the  Erie,  and  the  Pennsylvania  roads,  in  M'hich 
war  the  managers  of  the  New  York  Central  and  the  Erie  were  the  close 
allies  of  the  "  Standard  Oil  Company."  Concerning  this  contest,  the  in- 
vestigating committee  appointed  by  the  Legislature  of  New  York,  in  their 
report,  say  : 

"  The  Central  and  Erie  Railroads  joined  hands  with  the  Standard,  and 
proceeded  to  enforce  its  demand  by  a  war  of  rates,  which  terminated  suc- 
cessfully in  October  of  that  year.  The  oil  traffic,  instead  of  being  more 
profitable  to  the  Central  and  Erie,  has  certainly  been  less  remunerative 
since  that  war  than  before.  We  are  unable  to  find  the  slightest  respect 
wherein  it  resulted  to  the  advantage  of  these  roads.  The  Standard  got  the 
'  plum,'  and  as  a  result  it  owns  exclusively  the  terminal  facilities  for 
handling  oil  of  the  four  trunk-roads." 

The  doubts  of  the  committee  with  reference  to  the  resulting  advantages 
to  the  Central  and  Erie  roads  might  have  been  resolved  by  a  more  search- 


THE  RAILWAY  AND   "TRUST"  123 

The  cliief  cause  assigned  for  tlils  alliance  by  the 
railway  managers,  whenever  its  propriety  has  been 
questioned,  has  been  that  such  an  arrangement  pre- 
vented destructive  competition  for  the  freight  be- 
tween the  roads ;  but  the  real  reason  consisted  in 
the  fact  that  the  managers  of  these  roads  derived, 
through  indirection,  from  the  "  Standard  Oil  Trust  " 
larger  individual  revenues  than  any  interest  in  their 
roads  could  or  would  give  them ;  and  this  has  been 
the  effectual  bond  for  the  continuance  of  the  relation. 

It  may  be  said  that  all  the  inner  secrets  of  the 
hybrid  "Trust"  are  profound.  They  are  hidden 
within  the  breasts  of  one  or  two  men,  too  well 
guarded  to  enable  our  courts  or  committees  by  any 
existing  processes  to  bring  them  to  light.  But,  no  cir- 
cumspection can  keep  all  of  the  results  of  these  secrets 
entirely  and  permanently  from  the  public.  If  we 
cannot  precisely  define  them,  we  are  still  enabled,  by 
the  immense  potency  of  the  results,  to  infer  the  gen- 
eral character  of  the  structure  which  contains  them. 
I  venture  to  say,  as  an  inference  from  what  we  knoAV 
of  the  character  of  the  methods  of  the  "  Standard 
Oil  Trust,"  that  the  books  of  that  "Trust"  do  not 
sho\v  the  names  of  any  of  the  managers  of  the  rail- 
ing examination  of  the  relations  of  the  "Standard  Oil  Company"  to  the 
managers  of  the  Central  and  Erie  roads.  It  is  more  than  possible  that 
whilst  the  roads  themselves  were  not  benefited,  the  managers  of  those  roads 
were.  Whatever  independent  refining  industry  there  was  along  the  line  of 
the  Pennsylvania  Railway,  or  for  that  matter  along  the  line  of  any  of  the 
trunk-lines,  was  gradually  paralyzed  or  absorbed  ;  and  thenceforth  the 
large  activity  of  the  business  was  transported  to  the  central  point  of  distri- 
bution in  Cleveland.  Ohio. 


124  INDUSTRIAL   LIBERTY 

ways  as  holders  of  "  trust  "  certificates ;  that  the  in- 
terests of  railway  managers  in  that  "  Trust "  will  be 
found  to  be  secured  to  those  mauao'ers  throuorh  con- 
tracts  and  arrangements  which  do  not  render  it 
necessary  that  their  names  should  appear  in  any  way 
as  beneficially  interested  in  the  "Trust"  itself; 
moreover,  that  the  railway  managers,  wherever  then" 
services  are  enlisted  in  behalf  of  the  "Trust,"  are 
recompensed  by  an  interest  in  the  "  Trust " — an 
interest  which  they  do  not  absolutely  own,  but 
which  they  enjoy  as  dependent  upon  the  continu- 
ance of  their  authority  with  their  respective  roads ; 
that  this  interest  therefore  ceases  with  the  death 
of  such  mana2;ers  or  with  their  removal  from  office ; 
and  that  thus  there  will  be  found,  for  the  efficient 
guarding  in  secrecy  of  the  relations  between  the 
managers  of  the  "  Trust "  and  the  managers  of  the 
railways,  a  "  trust "  within  a  "  trust." 

Let  us  now  look  at  some  of  the  possibilities  of  ac- 
complishment by  the  employment  of  this  hybrid 
"  trust "  device,  and  also  at  some  of  the  possibilities 
for  its  eluding  any  investigation  which  may  be  insti- 
tuted by  judicial  processes  into  its  secret  methods. 
A  number  of  parasitic  corporations,  bound  into  unity 
of  possession,  power,  and  interest  by  the  hybrid 
"  Trust,"  may  be  so  managed  that  each  one  of  the  con- 
stituent corporations  may  preserve  to  itself  all  of  the 
outward  appearance  of  autonomy.  Each  one  may  keep 
its  accounts  as  if  it  were  a  separate  and  independent 
individual.    The  accounts  are  subject  to  audit  by  the 


THE  RAILWAY  AND   "TRUST"  1 25 

unified  power,  but  there  is  not  necessarily  any  thing 
in  them  to  indicate  any  dependence  upon,  or  relation 
to,  that  unified  power.  For  instance,  one  of  these 
parasites  is  called  a  pipe-line.  It  is  organized  for  the 
exclusive  purpose  of  receiving  and  storing  the  pro- 
duct of  the  oil  region.  Another  is  established  for 
the  apparent  purpose  of  conducting  shipping  facili- 
ties at  the  terminal  points  of  the  railways.  To 
all  outward  appearance  it  is  an  independent  cor- 
poration, and,  as  such,  may  deal  with  the  railways 
by  independent  contracts.  A  third  parasite  is 
erected  for  the  purpose  of  constructing,  using, 
and  leasing  freight  cars,  on  terms  which  may  be 
agreed  upon  between  the  managers  of  the  railway 
and  itself  as  an  independent  company,  for  carrying 
freight  from  point  to  point.  A  fourth  is  erected  for 
conducting  the  commercial  enterprise  of  buying 
crude  petroleum,  refining  it,  selling  it.  Each  of  these 
corporations  thus  separately  organized  is  separately 
officered.  They  stand  before  the  public  as  separate  and 
autonomous  coi'porations,  with  independent  contract- 
ing power,  and  without  any  apparent  or  outward 
relation  to  each  other.  When  any  one  of  them  is 
summoned  to  court,  before  the  court  it  alone  is  a 
party  to  the  cause.  Under  these  circumstances,  how 
is  the  individual  shipper,  competing  in  the  re- 
fining industry,  to  obtain  complete  redress  for  dis- 
criminations exerted  against  him  by  such  a  "  trust "  ? 
When  the  managers  of  a  railway  are  summoned 
under  the  charge  of  discrimination  against  an  indi- 


126  INDUSTRIAL  LIBERTY 

vidual  shipper  of  oil,  tliey  may  easily  show  that  no 
such  discrimination  exists,  as  between  such  shipper 
and  the  particular  corporation  belonging  to  the 
"  trust "  which  is  engaged  in  refining  and  shipping. 
Neither  the  books  of  the  railway  company  nor  those 
of  the  minor  parasite  need  divulge  the  slightest  ap- 
pearance of  discrimination  anywhere,  nor  need  there 
be  in  their  direct  relations  the  existence  of  such 
discrimiuation ;  even  the  freight  agent  contracting 
for  freight  may  be  ignorant  of  them.  Another  cor- 
poration, a  creature  of  the  "  trust "  but  to  all  appear- 
ances entirely  independent,  not  a  party  to  the  suit, 
may  have  contracted  with  the  railway  company  upon  a 
subject  which  does  not  directly  concern  transportation, 
and  may  have  effectually  concealed  within  its  contracts 
the  rebates  to  be  paid  the  hybrid  "  trust,"  which  do  not 
appear  in  the  contracts  between  any  of  the  shipping 
corporations  and  the  railways.  Nevertheless,  these  cor- 
porations are  all  the  servants  of  one  power,  each  one 
making  its  separate  contribution  to  one  fund,  and  all 
held  in  unity  by  the  hybrid  "  trust "  bond.  In  one  of 
the  cases  lately  before  the  Inter-State  Commerce  Com- 
mission, which  I  shall  notice  more  fully  hereafter,  the 
particular  corporation  belonging  to  the  "  Standard 
Oil  Trust"  which  was  brought  into  the  case  was  the 
Standard  Oil  Company  of  Kentucky.  The  examina- 
tion was  necessarily  confined  to  discriminations  which 
were  made  against  the  complainant,  by  the  railway, 
in  favor  of  this  particular  corporation  belonging  to 
the  "  Trust."      Whilst  acts  of  discrimination  were 


THE  RAILWAY  AND   "TRUST"  12/ 

found  in  those  relations  upon  which  to  warrant  a 
finding  by  the  Commission  against  the  railways,  the 
association  of  the  "  Standard  Oil  Trust "  was  not, 
and  could  not,  under  the  circumstances,  have  been 
investigated.  The  relationship  which  existed  be- 
tween the  individual  officers  of  that  road  and  the 
hybrid  "  Trust "  itself,  as  a  "trust,"  were  not  touched. 
In  order,  therefore,  to  determine,  as  between  the  in- 
dependent shipper  and  a  corporation  which  is  owned 
by  the  hybrid  "Trust,"  whether  there  exists  any 
exceptional  advantages  to  such  corporation  over  the 
independent  shipper,  it  will  be  necessary  not  only  to 
ascertain  the  bond  of  union  of  each  of  these  con- 
tributing "  trust  "  corporations,  but  also  to  ascertain 
any  secret  relations  \V'hich  exist  between  the  sum  of 
the  corporations  constituting  the  "  Trust "  and  the 
individual  railway  manager  or  any  combination  of 
railway  managers.  If,  concealed  beneath  separate 
contracts,  made  by  apparently  distinct  corporations, 
there  exists  a  unity  of  interests  which  supports  a 
hidden  relation  between  the  "  Trust "  and  the  rail- 
way managers,  by  which  insidious  advantages  are 
given  by  the  railway  through  indirect  channels,  the 
fact  of  such  discrimination  can  only  be  ascertained 
by  a  knowledge  of  these  circumstances.  If  the  I'ail- 
way  managers  have  an  interest  in  the  aggregate 
parasite  corporations  which  constitute  this  "  Trust," 
and  if  these  managers  receive  their  compensation  for 
discriminations  throusrh  channels  as  concealed  and 
indirect  as  those  through  which  they  make  the  dis- 


128  INDUSTRIAL   LIBERTY 

criminations,  tlie  fact  of  such  discrimination  will 
never  become  known  until  all  these  circumstances 
are  revealed.  Until  the  sanctity  of  secrecy  is  denied 
the  "  Trust,"  and  Judicial  examination  is  made  more 
searching  than  corporate  concealment,  no  adequate 
correction  of  the  evil  can  be  hoped  for. 

Considering  the  "  Standard  Oil  Trust  "  as  a  whole, 
it  is  a  huge  combination  of  corporati^ons  with 
franchises  derived  from  almost  every  State.  These 
are  held  in  complete  unity  of  possession.  This 
"  Trust "  stands,  in  a  country  which  is  assumed  to  be 
a  republic,  in  almost  absolute  control  of  an  industry. 
It  has  seized  this  industry,  and  effectually  controls 
all  the  rights  of  the  individuals  engaged  in  it.  It 
thus  in  this  field  exercises  an  influence  immeasurably 
greater  than  any  that  the  government  itself  would 
dare  to  exercise.  It  is  an  or2:anization  manacled  in  its 
minutest  details,  with  the  order,  precision,  and  regu- 
larity of  a  government  department.  For  its  chief  cap- 
ital it  has  the  working  power  of  its  unified  charters 
and  profound  secrecy.  So  far  as  concerns  administra- 
tive power,  within  its  field  of  action  it  is  far  stronger 
than  the  government  itself.  Here,  beyond  the  reach 
of  the  courts,  the  hybrid  "  trustees  "  survey  the  field 
of  their  past  gains  and  contemplate  their  future 
conquests  with  a  confidence  which  will  not  easily  be 
shaken. 


CHAPTER  V 

THE   INFLUENCE    OF   THE 

SITES    UPON    INDUSTRIAL    LIBEETY 

I  HAVE  hitherto  treated  of  the  parasitic  corporation 
in  its  relation  to  the  management  of  the  railway.  It 
has  played  its  part  also  in  the  coustruction  of  the 
railway — a  part  which,  although  prominent,  I  shall 
merely  allude  to  here  before  proceeding  to  notice 
other  parasitic  gro\vths  which  have  lately  come  into 
prominence,  especially  in  our  cities.  Mr.  Adams,  in 
an  essay  on  "  The  Granger  Movement,"  has  forcibly 
described  its  function  in  the  construction  of  the  rail- 
ways throughout  the  "West.  "  It  began,"  he  says, 
"  high  up  in  the  wretched  machinery  of  the  con- 
struction company,  with  all  its  thimble-rig  contriv- 
ances for  transferring  assets  from  the  treasury  of  a 
corporation  to  the  pockets  of  a  ring.  Thence  it 
spread  downward  through  the  whole  system  of  sup- 
plies and  contracts  and  rolling-stock  companies,  until 
it  might  not  unfairly  be  said  that  every  thing  had  its 
price."  '  As  a  constructive  agent  the  parasite  reached 
its  climax  in  the  building  of  the  Union  Pacific  Rail- 
way, through  the  employment  of  the  ''  Credit  Mo- 

'  C.  F.  Adams,  Jr.,  North  American  Keviezu,  April,  1S75,  p.  402. 

129 


130  INDUSTRIAL   LIBERTY 

bilier,"  and  in  the  building  of  the  Central  Pacific 
and  Southern  Pacific  railways,  where  it  was  employed 
for  the  usual  purpose  of  diversion  on  an  immense 
scale. 

Besides  the  parasitic  growths  on  the  railway  system, 
I  will  now  notice  some  of  those  of  the  complex  or  hy- 
brid kind  which  are  unconnected  with  steam  railway 
management ;  those,  namely,  that  serve  the  purpose  of 
appropriating  to  the  "  trust-manager  "  that  large  mar- 
gin of  profit  which  comes  from  the  corporations  fur- 
nishing light  and  locomotion  in  the  large  cities, — 
the  gas  corporations  and  "  trusts,"  and  the  street  rail- 
way corporations  and  "ti'usts." 

There  are  circumstances  which  afford  reason  for 
inferring  that  there  are  members  of  the  "  Standard 
Oil  Trust "  who  are  in  close  interest  and  alliance 
with  the  gas  "  trusts."  The  "  Standard  Oil  Trust," 
as  we  have  seen,  is  in  substantial  control  of  all  of  the 
products  of  petroleum  in  this  countr}^  One  of  these 
products,  benzine,  is  an  important  element  in  the 
manufacture  of  the  kind  of  gas  which  the  "trusts" 
furnish.  This  is  a  comparatively  new  kind,  some- 
times called  water-gas,  the  result  of  certain  late  dis- 
coveries in  the  art  of  making  hydrogen  gas  and  car- 
buretting  it  with  the  lighter  products  of  petroleum. 
The  gas  thus  made  is  much  less  costly  than  any  here- 
tofore manufactured  by  the  use  of  coal  and  rosin. 
The  normal  tendency,  through  the  cheapening  of  this 
new  process,  would  be  to  give  the  advantage  of  the 
reduced  cost  to  the  consumer.     If  anything  like  the 


INFLUENCE    OF  THE  ''TRUSTS"  I3I 

old  liigli  prices  are  to  be  maintained,  therefore,  this 
can  only  be  accomplished  by  rigorou-sly  stifling  com- 
petition. By  maintaining  these  old  prices,  or  any 
thing  like  them,  the  profits  arising  from  the  furnish- 
ing of  this  new  gas  are  very  great.  These  facts  have 
addressed  themselves  with  great  force  to  the  cupidity 
of  the  organizers  of  "gas  trusts,"  and  have  called 
into  beiu2:  the  usual  artifices  for  extermiuatino;  com- 
petition  and  securing  a  firm  and  permanent  hold 
upon  the  profits.  From  the  fact  that  the  "  Standard 
Oil  Trust "  controls  the  product  of  petroleum,  and 
from  the  methods  which  the  "  gas  trusts  "  employ,  it 
is  fair  to  infer  that  the  scheme  is  inspired  by  the 
genius  of  the  "Standard  Oil  Trust."  Indeed,  the 
dexterity  in  the  employment  of  these  methods  is 
such  as  only  experts  understand,  and  the  man- 
agers of  the  "Standard  Oil  Trust "  are  undoubtedly 
such  experts.  They  have  the  faculty  of  adapting 
artifices  to  circumstances,  which  is  only  derived  from 
continuous  practice.  The  managers  of  the  "  Gas 
Trust "  have  shown  great  versatility  in  suiting  their 
schemes  to  the  various  conditions  which  they  have  to 
encounter  in  the  different  localities.  Thus,  they  have 
adopted  destructive  competition  in  one  city,  diplo- 
macy in  another,  and  have  combined  the  two  in 
a  third. 

The  first  considerable  effort  was  made  in  several 
of  tlie  seaboard  cities,  where  they  rather  pursued  the 
course  of  throttling,  by  destructive  competition,  the 
gas   industry   which   they    found    opposing    them. 


132  INDUSTRIAL   LIBERTY 

Tliey  furnislied  gas  to  consumers  often  without 
mucli  reference  to  cost  of  production.  Meanwhile, 
they  actively  and  aggressively  pursued  the  work  of 
destruction.  The  money  for  conducting  this  war- 
fare was,  of  course,  not  derived  from  the  resources 
of  the  company  conducting  it,  but  from  the  outside 
resources  of  the  organizers,  and  the  contest  was  re- 
lentlessly pursued  until  the  opposition  W' as  absorbed 
into  the  monopoly,  and  given  a  share  of  the  Joint 
stock.  The  monopoly  thereupon  established  its 
prices,  Av^hich,  although  limited  by  legislative  enact- 
ment, afforded  large  profits  which  have  become 
permanent  by  practically  exclusive  control.  It  may 
be  said  that  their  mode  of  procedure  is  in  general 
as  follows  :  Where  they  find  two  or  more  gas  com- 
panies in  a  city,  they  propose  the  erection  of  a 
"  trust,"  with  what  they  euphemistically  call  a  new 
capitalization,  a  division  of  the  stock,  and  usually  a 
new  issue  of  bonds  ;  and  where  this  is  resisted  by 
any  of  the  existing  companies,  they  procure  the  con- 
ti'ol  of  such  as  they  can  by  purchase  of  stock  or 
agreement,  and  wage  a  destructive  competition  until 
they  bring  the  recalcitrant  companies  to  terms. 
It  may  be  that  in  the  j)rogress  of  their  competition 
they  will  proceed  to  buy  up  the  depreciated  stock 
of  their  adversaries.  It  is  not  unlikely,  however, 
that,  with  their  show  of  power  for  destructive  com- 
petition, they  often  succeed  in  making  terms  with- 
out the  resort  to  warfare. 

In   Chicago  they  began  tentatively   as    early    as 


INFLUENCE    OF  THE  "TA'USTS"  1 33 

1886.  They  made  themselves  known  in  their 
"  trust  ■'  capacity  through  the  announcement  that 
they  were  organizing  for  the  pui-pose  of  securing  to 
the  citizens  the  "  advantages  of  economic  and  har- 
monious management,"  The  manner  in  wliich  this 
laudable  purpose  was  finally  accomplished  has  been 
partly  revealed  by  a  suit  which  was  instituted  by 
the  executors  of  Emanuel  Hoffman  of  New  York 
against  the  several  Companies  concerned  in  the 
organization  of  the  "  Trust."  The  relation  of  one  of 
the  Chicago  companies,  the  "  Chicago  Gaslight  and 
Coke  Company,"  to  the  transaction  illustrates  the 
real  purpose  which  actuated  the  organizers.  The 
JSfew  Yorh  Times  of  November  20,  1887,  in  its 
editorial  column,  sets  forth  this  relation  in  the  fol- 
lowing clear  statement.     It  says  : 

"  The  Chicago  Gaslight  and  Coke  Company  was  incor- 
porated nearly  forty  years  ago  with  a  capital  of  $100,000. 
Its  earnings  have  been  enormous.  By  the  use  of  them 
and  without  the  additional  contribution  of  one  dollar  by 
the  fortunate  stockholders  the  capital  was  raised  from 
$100,000  to  $5,000,000,  while  very  large  annual  dividends 
were  declared.  Statements  showing  the  company's  con- 
dition have  been  placed  upon  its  books  every  month. 
On  the  30th  of  August  the  books  showed  that  the  com- 
pany's assets  were  $6,465,002  (for  the  most  part  real 
estate),  while  its  liabilities  were  $5,469,052  (including 
issued  capital  stock  to  the  amount  of  $4,984,200),  and  the 
surplus  was  declared  to  be  $1,319,041.  This  statement 
closely  resembled  those  of  the  preceding  months  of  the 
year.     The  company  had  been  making  money.     Regular 


134  INDUSTRIAL   LIBERTY 

dividends  had  been  paid  up  to  and  including  the  one  for 
January  1st,  and  the  books  show  that  the  net  earnings 
for  the  first  nine  months  of  the  year  were  sufificient  to 
warrant  an  annual  dividend  of  eight  or  ten  per  cent. 
But  on  July  ist  the  usual  dividend  was  passed  and  the 
official  statement  for  September  30th  showed  that  the 
affairs  of  the  company  had  undergone  a  great  change. 
In  short,  the  company  had  suddenly  become  insolvent. 

"The  liabilities  had  been  raised  from  less  than  $5,500,- 
000  to  $12,698,968  by  the  addition  of  $7,650,000  in  mort- 
gage bonds.  Why  had  the  property  been  burdened  with 
this  mortgage  ?  In  the  spring  a  band  of  speculators  from 
Philadelphia  .  .  .  devised  a  scheme  for  gaining  possession 
of  all  the  gas  companies  in  Chicago  and  monopolizing  the 
city's  gas  supply.  They  began  with  this  company  and 
quietly  bought  a  very  large  majority  of  its  stock.  They 
were  assisted  by  two  or  three  residents  of  Chicago.  On 
March  12th,  at  a  stockholders'  meeting,  they  ousted  the  old 
directors  and   elected  a  new  board 

"  Having  obtained  control  of  the  company,  these  specu- 
lators proceeded  to  exploit  its  resources.  They  needed 
money  for  use  in  making  the  trust  or  for  other  purposes. 
On  August  27th  the  directors  issued  upon  the  property  of 
this  prosperous  and  solvent  corporation  a  mortgage  of 
$10,000,000,  ostensibly  for  the  extension  and  develop- 
ment of  its  works,  although  they  now  admit  that  the 
money  was  used  for  other  purposes.  A  deed  of  trust  cov- 
ering the  company's  property  was  delivered  to  the  Fidelity 
Insurance  Trust  and  Safe  Deposit  Company  of  Philadel- 
phia. Of  thjs  mortgage  bonds  to  the  amount  of  $7,650,- 
000  were  bought  by  the  Union  National  Bank  of  Chicago. 
The  Philadelphia  company  was  ordered  to  deliver  the 
bonds  to  the  bank.  On  October  4th  the  directors  who 
had  issued  the  mortgage  declared  a  dividend  of  $38.25  on 


INFLUENCE    OF  THE  ''TRUSTS"  1 35 

each  share  (par  $25)  of  the  company's  stock.  Immedi- 
ately thereafter  the  same  directors,  meeting  as  stockhold- 
ers, with  the  addition  of  one  E.  J.  Matthews,  ratified  this 
declaration.  The  Union  National  Bank  provided  the 
money,  and  the  gas  company  drew  checks  to  the  order 
of  the  stockholders  in  payment  of  this  dividend  of  153 
per  cent.  It  then  appeared  that  Matthews  held  198,383 
shares  (or  the  entire  capital  stock  issued,  except  977 
shares),  and  to  him  was  paid  $7,588,149.  Matthews  is  sup- 
posed to  represent  the  syndicate  as  a  kind  of  middle  man. 
In  this  way  the  proceeds  of  the  mortgage  were  bagged. 
Matthews  turns  up  as  the  holder  of  $14,000,000  of  the 
Chicago  Gas  Trust's  capital  stock,  which  is  $25,000,000." 

With  tlie  leverage  of  power  thus  obtained  by  the 
parasite,  these  organizers  have  gathered  together  the 
charters  of  the  gas  companies  of  Chicago  under  the 
immense  "  Trust."  Under  the  forms  of  this  ''  Trust " 
they  have  issued  mortgages  and  stock,  "  trust  "  cer- 
tificates representing  an  immense  capital,  a  part  of 
which  is  plainly  fictitious.  Having  divided  the  bonds 
and  certificates  among  themselves,  part  of  this  stock 
and  these  bonds  are  offered  to  the  community  at  a  price 
upon  which  the  bonds  will  yield  a  reasonable  rate  of 
interest  and  the  stock  a  moderate  rate  of  dividend. 
Upon  this  basis  these  bonds  may  be,  and  probably 
are,  sold  to  investors,  and  a  little  less  than  half  the 
certificates  are  likewise  disposed  of  to  the  investing 
community.  In  this  proceeding  they  have  aimed  to 
accomplish  a  threefold  definite  purpose.  First,  they 
have  secured  an  organization  whose  accounts  of  re- 
ceipts shall  exhibit  to  the  public  a  revenue  simply 


6  INDUSTRIAL   LIBERTY 


sufficient  to  pay  reasonable  interest  on  tlie  assumed 
capital.  They  liave  thus  endeavored  to  give  to  the 
organization  all  the  appearance  of  a  legitimate  com- 
mercial enterprise  with  moderate  gains  for  actual  in- 
vestment. This  delusion  they  would  doubtless  have 
succeeded  to  some  extent  in  establishing;  had  it  not 
been  for  interfering  litigation.  Their  second  jDurpose 
has  been,  through  the  sale  for  value  of  the  stock  and 
bonds  to  the  investors,  to  acquire  the  alliance  and 
support  of  these  investors — the  outside  stock  and 
bond  purchasers  who,  by  their  purchase,  become  the 
apologists  if  not  the  champions  of  the  scheme.  And 
their  third  purpose,  quite  as  important  as  anything 
else,  has  been  to  secure  the  advantage  which  the 
reserved  control  of  all  this  organization  gives  them 
for  binding  together  in  a  larger  "trust  "  the  gas  com- 
panies of  other  cities  where  a  like  margin  between 
cost  and  profit  may  be  seized,  where  a  like  hybrid 
"  trust "  may  be  or  has  been  created. 

Viewing  this  parasitic  corporation  as  it  developed 
in  Chicago,  one  cannot  help  being  struck  with  the 
queer  mixture  of  the  military  and  the  commercial 
qualities  which  the  management  of  it  exhibits.  The 
conception  of  the  scheme  is  marked  with  that  pecu- 
liar strategic  shrewdness  Avhich  belongs  to  the 
military  commander.  The  details  of  its  practical 
working  are  all  wrought  out  with  military  circum- 
spection. Added  to  this,  there  is  a  certain  commer- 
cial cunning  in  the  studied  effort  which  is  made  to 
keep  prominent  the  appearance  of  seeking  the  public 


INFLUENCE   OF   THE   "  TRUSTS"  1 37 

convenience,  and  to  conceal  the  features  which 
interfere  with  the  industrial  rights  of  the  community. 
The  organizers  have  possessed  themselves  of  a  pro- 
cess for  manufacturing  an  inferior  and  deleterious 
gas,  which  they  are  enabled  to  make  at  considerably 
less  cost  than  that  made  by  the  old  process  of  manu- 
facture. Thus  equipped,  they  sally  out  from  Pliila- 
delphia  to  fasten  their  parasite  upon  Chicago.  They 
find  several  gas  companies,  some  of  which  have  been 
stimulated  into  being  by  the  immense  margin  of 
profits  obtained  by  the  earlier  companies.  These 
companies  are  all,  notwithstanding  their  competition, 
still  realizing  very  large  profits  upon  the  amount 
of  money  which  is  invested  in  their  capital.  Under 
these  circumstances,  the  campaign  which  the  forces 
of  Philadelphia  have  to  conduct,  although  containing 
some  commercial  element,  is  mainly  military.  It 
consists  in  the  seizure  of  existing  corporate  struc- 
tures, and  in  bringing  them  into  subjection ; 
thereafter,  in  uniting  these,  and  re-chargiog  them, 
by  the  issue  of  stocks  and  bonds,  to  an  amount 
which  will  render  a  moderate  rate  of  interest  on 
the  bonds  and  moderate  dividends  upon  the  stock. 
To  quiet  the  hostility  of  the  general  public,  who 
are  not  immediately  engaged  in  the  contest,  it  is 
promised  that  the  rate  of  exaction  shall  be  less 
than  it  was  under  the  old  regime — a  promise 
which  is  afterwards  probably  fulfilled  by  furnish- 
ing the  gas  at  a  trifle  less  than  it  was  furnished 
before.     By  this  piece  of  strategy  the  public  become 


138  INDUSTRIAL   LIBERTY 

neutral,  and  regard  tlie  conflict  as  one  simply  between 
tlie  immediate  contestants — a  few  corporations, — a 
conflict  in  wliicli  the  consequences  are  not  at  all 
likely  to  touch  the  rights  or  the  interests  of  the 
people.  The  plan  of  action  of  these  attacking 
organizers,  as  we  have  seen,  was  to  take  one  of 
these  companies,  in  order  to  make  warfare  nj)ou  the 
others ;  and  thus  they  finally  brought  them  to  sub- 
jection. The  capitulation  of  the  conquered  com- 
panies involved  the  surrender  of  their  stock,  and 
homage  for  the  receiving  back  from  the  victors  such 
a  proportion  of  interest  in  "  trust "  certificates  as 
left  the  victors  a  majority  of  the  stock,  coupled  of 
course  with  the  control  of  the  "  Trust." 

This  procedure,  as  I  have  said,  is  a  mixture  of 
military  and  commercial  operation — the  military 
predominating.  It  recalls  some  of  Caesar's  efforts  at 
colonization,  or  some  of  the  mediaeval  conquests  fol- 
lowed by  a  rendering  of  fealty  on  the  part  of  the 
vanquished  to  the  victors, — a  thorough  application  of 
militant  methods  to  commercial  enterprise.  The  sum 
of  it  all  is,  that  a  Philadelphia  syndicate  has  gone  to 
Chicago,  appropriated  an  industry,  and  made  a  per- 
petual parasite  upon  that  industry,  and  retains  the 
power  and  control  by  w^liich  that  parasite  is  made 
perpetual.  With  what  permanent  outlay  of  money  by 
the  syndicate  has  this  been  acquired  ?  Probably,  a 
very  little ;  possibly,  none.  While  we  are  not  enabled 
by  the  figures  which  we  have  to  ascertain  just  what 
the  syndicate  expended  in  the  purchase  of  the  stock 


INFLUENCE   OF  THE  "TRUSTS"  1 39 

of  the  first  corporation  of  whicli  they  obtained  control, 
or  what  they  expended  in  warfare,  or  what  in  the  il- 
licit purchase  of  influence,  we  can  easily  believe  that 
in  casting  up  their  accounts  they  found  they  had  re- 
couped themselves  for  all  their  initial  investments, 
and  that  they  have  as  a  balance  the  controlling  power 
of  the  "trust"  beside.  In  this  case,  their  financial 
accomplishment  may  be  thus  formulated  :  They  have 
caused  the  public  to  pay  for  the  plant  which  is  the 
vehicle  necessaiy  for  taxing  the  public ;  then,  having 
taken  possession  and  control  of  the  plant,  they  man- 
age it  and  reserve  to  themselves  the  lion's  share  of 
the  revenues.  No  conqueror  bent  on  plunder  could 
wish  for  more.  Whether  they  have  accomplished 
this  entirely  without  permanent  outlay  it  is  impos- 
sible, as  I  have  said,  to  determine.  What  they  have 
accomplished  in  all  probability  approximates  it. 
Stimulated  by  their  immense  success,  their  course 
of  "  colonization  "  will  not  cease.  They  garrisoned 
their  conquered  territory  in  Chicago  with  a  few 
officers  and  directors,  and  then  moved  their  main 
forces  to  San  Francisco.  What  the  result  of  this 
movement  has  been  we  are  not  yet  fully  informed. 
We  know,  however,  that  they  have  been  moving 
for  some  time  past  from  city  to  city  in  the  East 
and  quietly  making  their  conquests.  It  is  only 
by  the  development  of  the  legal  opposition  in  Chi- 
cago that  any  of  the  details  of  the  strategy  have 
become  public. 

When  New  York,  Boston,  Baltimore,  Philadelphia, 


I40  INDUSTRIAL   LIBERTY 

Chicago,  New  Orleans,  San  Francisco,  Albany,  Wash- 
ington, and  such  other  cities  as  can  afford  margin 
enough  to  tempt  the  cupidity  and  craft  of  the 
"  trust "  organizers  shall  have  come  under  one  im- 
mense "  trust,"  it  is  not  difficult  to  see  how  any  at- 
tempt at  competition  called  into  being  by  a  sense  of 
oppression  may  be  promptly  put  down  from  the 
common  revenues  of  a  hybrid  "  trust."  The  or- 
ganizers have  learned,  by  practice  in  their  art,  the 
value  of  widely  diffused  possessions  for  the  accom- 
plishment of  such  a  purpose.  In  all  this  scheme  it 
must  be  seen  that,  as  in  the  case  of  the  "  Standard 
Oil  Trust,"  they  have  not  added  to  an  industry ; 
they  have  not  created  an  enterprise ;  they  have  not 
imported  commercial  skill.  Their  processes  are 
simply  those  of  appropriation ;  their  structure  is 
framed  solely  to  this  end,  and  the  ^vhole  value  of 
that  structure  to  them  is  that  it  accomplishes  this 
end. 

These  parasitic  processes  are  employed  quite  as 
efficiently  in  organizing  and  conducting  cable  and  sur- 
face railways,  sometimes  under  the  complex  form  of 
the  "  trust  "  as  I  have  described  it,  sometimes  wdth  the 
use  of  the  single  corporation.  If  A  were  to  obtain  a 
charter  to  place  a  gate  across  Fulton  Street  at  Broad- 
way, with  the  power  to  exact  a  penny  from  every  one 
passing  the  gate,  the  scheme  would  doubtless  create 
great  wealth  for  A,  but  it  would  not  add  one  cent  to 
the  public  wealth.  It  Avould  simply  be  a  process 
for  transferring  the  money  of  the  public  into  A's 


INFLUENCE    OF  THE  "TRUSTS"  I4I 

pocket.  The  difference  between  such  a  charter  and 
the  one  which  was  conferred  for  the  construction  of 
a  railway  on  Broadway,  so  fai'  as  the  holders  are  con- 
cerned, was  only  a  difference  of  pretence — the  fur- 
nishing a  convenience  to  the  public.  Beneath  this 
difference  the  motive  in  the  two  cases  is  the  same — 
the  wish  to  seize  and  appropriate  a  public  right, 
without  any  disposition  to  add  to  the  public  con- 
venience. Of  course,  the  convenience  was  neces- 
sary ;  it  was  necessary  as  a  part  of  the  inducement 
with  which  to  beguile  the  public.  But  the  motive 
of  the  holder  is  simply  his  own  gain — to  work  to 
make  a  great  gain  as  nearly  as  possible  out  of  noth- 
ing ;  and  the  corporate  charter  is  the  means  for  this 
end. 

The  hybrid  "  trust  "  is  emj)loyed  for  another  insid- 
ious purpose,  a  purpose  which  is  unconnected  with 
raihvays  or  municipalities.  It  has  come  into  consid- 
erable prominence  within  the  past  few  months  as  a 
means  for  the  appropriation  of  that  premium  which 
the  jDrotective  tariff  indirectly  affords  to  certain 
special  industries.  In  this  field  it  operates  by  limit- 
ing the  production  of  the  special  industry.  At  the 
same  time,  it  depresses  the  cost  of  manufacture  by 
lowering  the  wages.  The  difference  thus  accom- 
plished, the  "  trust "  appro j)riates.  The  essential  mo- 
tive for  this  kind  of  "  trust "  ought  of  itself  to  be  suffi- 
cient to  illustrate  that  the  continued  fostering  through 
protection  contains  a  large  element  of  delusion. 
Every  protectionist    assumes  that   the  tariff  stimu- 


142  INDUSTRIAL    LIBERTY 

lates  tlie  growth  of  tlie  industry  to  whicli  it  is 
applied.  There  is  no  daim  that  it  ought  to  exist 
for  any  other  purpose,  and  yet  the  only  possible 
office  of  the  "  trust "  is  to  repress  that  growth  and 
appropriate  the  result.  It  is  true,  it  does  this 
indirectly;  but  it  does  it  with  none  the  less 
certainty.  If  in  a  given  commodity,  say  steel,  the 
product  in  this  country  exceeds  the  consumption,  the 
sole  purpose  for  the  erection  of  a  "  trust "  is  to  restrain 
this  production,  either  by  arbitrarily  limiting  the 
amount  produced  by  each  manufacturing  mend^er  of 
the  "  trust,"  or  else  by  closing  a  part  of  the  manufac- 
tories at  the  behest  of  the  "trust,"  and  thereafter 
compensating  the  o^vners  of  the  closed  manufac- 
tories by  letting  them  participate  in  the  profits  of 
the  restrained  industry.  Tlie  protectionists  thus  cry 
for  protection  because  they  assiune  that  it  encourages 
industry,  but  their  "  trust "  flatly  contradicts  the  as- 
sumption. They  seek  to  prohibit  foreign  competition 
by  a  tariff,  and  then  repress  home  industry  by  a 
"  trust."  Thus  the  salt,  steel,  lead,  rubber,  and  other 
similar  "  trusts  "  methodically  and  rigorously  aim  to 
keep  from  growing  the  several  industries  Avhich  the 
tariff  is  to  "  foster,"  in  order  that  the  organizers  of 
a  "trust"  may  profit  by  the  repression  of  those 
industries,  and  then,  by  the  reduction  of  wages  and 
the  increase  of  price,  appropriate  the  government's 
bounty. 

The  last  example  of  the  li\l)rid  ])arasite  which  I 
have  considered  is  the  "  trust."     This  did  not  sj^ring 


INFLUENCE   OF  THE  "TRUSTS"  1 43 

into  sudden  growth.  Whilst  it  has  only  come  to 
public  attention  within  the  past  year  or  two,  it  is  the 
clear  result  of  a  long  line  of  causes  that  were  set 
in  motion  when  the  first  favored  shipper  of  the  rail- 
way divided  the  moderate  results  of  his  favoritism 
in  secret  with  the  railway  manager'.  From  this  first 
simple  personal  appropriation,  to  that  huge  "  trust " 
structure  Avhich  seized  the  industry  of  a  whole 
district  of  country,  the  growth  has  been  gradual ; 
and  the  first  step  of  that  growth  stands  in  logical 
relation  to  the  last.  Similarly,  from  the  first  rail- 
way discrimination  to  that  management  which  insidi- 
ously secured  the  custody  of  the  Erie  Railway  and 
conducted  that  custody  for  wholesale  plunder,  a  like 
sequence  appears.  ISTor,  indeed,  is  this  management  of 
the  Erie  Railway  the  highest  expression  of  parasitic 
growth.  In  the  possession  of  that  road,  as  in  a 
preparatory  school,  the  custodians  learned  the  value 
to  them  of  the  loose  ownership  of  shares  in  corpora- 
tions, and  of  the  vague  public  notions  of  railway 
custody.  They  learned  the  art  of  manipulating  legis- 
latures, courts,  and  markets,  as  the  eflicient  means 
by  which  ''  custody,"  intrenched  in  possession,  might 
make  the  beneficiary  the  \dctim.  When  they  were 
driven  at  last  from  the  possession  of  the  Erie  they 
only  began  their  real  work.  Thenceforth,  as  the 
West  afforded  a  new  and  larger  field  for  their  en- 
ergies, there  they  went,  and  there  they  have 
reached  the  highest  results  of  their  "  custody "  and 
audacity.    There,  having  insidiously  worked  into  the 


144  INDUSTRIAL   LIBERTY 

positions  of  custodian,  they  no  longer  confined  their 
efforts  simply  to  control  for  temporary  advantage, 
but  deliberately  proceeded  to  convert  the  property 
of  the  cestuis  que  truntent  to  their  own  permanent 
legal  o^vnership. 

Nothing  has  been  more  natural  than  parasitic 
growth.  We  cannot,  therefore,  assume  that  it 
has  been  the  result  of  genius;  that  the  manipu- 
lators can  in  any  true  sense  be  called,  as  somC' 
reformers  have  called  them,  "  the  captains  of  indus- 
try." Whilst  there  are  doubtless  many  able  men 
engaged  in  railway  and  corporate  management,  the 
great  mass  of  them  are  only  results  of  a  condition ; 
they  are  men  -who  have  learned  to  work  in  service 
as  men  learn  a  trade.  There  are  thousands  out- 
side these  corporations  of  as  signal  business  ability. 
The  corporation  parasite  has  been  held  up  by  its 
promoters  as  a  necessary  and  beneficial  supporter  of 
industry.  The  railway  managei's  have  particularly 
assumed  to  have  called  industry  into  being.  They 
point  to  railway  development  and  to  the  growth 
of  the  country,  as  if  it  ^vere  their  own  creation 
— ^the  result  of  their  favorite  methods, — and  there- 
fore a  full  warrant  for  these  methods.  Neverthe- 
less, it  ought  not  to  require  much  examination  or 
reasoning  to  convince  one  not  only  that  these 
methods  have  been  unnecessary,  but  that  they  have 
been  obstructive  of  all  that  is  wholesome  in  the 
'  groAvth.  We  ought  not  to  have  to  go  far  to  find  that 
the  corporate  structure,  as  developed  in  the  parasite 


INFLUENCE    OF  THE  "TRUSTS"  145 

corporation,  has  in  no  true  sense  been  a  necessity  for 
tte  enlargement  of  transportation  or  for  tlie  promo- 
tion of  industry. 

Keal  industry  originates  with,  the  individual  who 
labors  in  the  various  fields  of  activity.  While  the 
transporter  may  stimulate  and  may  further  energy, 
he  does  not  create  it ;  and  it  is  not  necessary  for  this 
stimulus  that  artifices  should  intervene  between  the 
industrial  worker  and  the  consumer  for  the  secret 
abstraction  of  gains.  The  evils  which  we  have 
suffered  have  come  mainly,  not  from  the  railway  or 
from  the  railway  shareholder,  but  from  the  railway 
manager.  His  work  of  abstraction  has  not  been  for 
the  support  of  the  railway  ;  it  has  been  an  abstraction 
from  the  I'ailway,  and  in  all  the  industry  which  has 
grown  up  in  this  country  there  has  been  no  reason 
for  the  ofiice  of  the  dishonest  abstracter.  When 
we  consider  his  larger  power  over  the  civil  and 
political  rights  of  the  citizen,  and  the  manner  in 
which  it  is  employed,  we  must  conclude  that  a 
great  part  of  the  demoralization  of  modern  in- 
dustry is  chargeable  to  his  influence.  He  has 
produced  in  industry  something  like  a  noxious  con- 
tagion. The  small  individual  dealer  first  found  his 
business  injured  by  the  secret  alliance  of  his  neigh- 
bor with  the  railway  ofiicial ;  and  at  last  this  al- 
liance drove  the  small  dealers  into  bankruptcy. 
When  from  isolated  instances  of  this  kind  there 
grew  to  be  a  system  which  made  success  in  any  un- 
dertaking depend  upon   organized  and  permanently 


146  INDUSTRIAL  LIBERTY 

constituted  secret  artifices,  rather  than  upon  free 
competition,  skill,  and  honesty,  but  one  result  was  to 
be  expected.  When  dishonesty  and  secrecy  become 
conditions  of  success  in  any  community,  skill  and 
honesty  diminish ;  nor  does  the  conscience  of  the 
community  remain  unaifected  under  these  circum- 
stances. It  invariably  deteriorates  ;  and  with  it  the 
whole  standard  of  morals,  public  and  private,  becomes 
degraded.  Individual  industry,  running  into  am- 
bushes erected  by  corporate  methods,  inevitably 
tends  to  moral  and  political  decay,  and  no  matter 
what  material  advantages  the  community  may  have, 
they  cannot  counteract  this  tendency.  Where  com- 
bination and  collusion  are  essential  to  success,  candor 
and  fair  dealing  cannot  flourish.  There  class  inter- 
ests are  sure  to  grow  and  to  continue  their  growth, 
until  at  last  each  man  who  has  any  remnant  of  light 
left  will  find  himself  holding  that  remnant  only  in  a 
secondary  way,  not  as  a  freeman  but  as  a  member  of 
some  illicit  alliance. 

If  we  take  the  parasite  fi'om  first  to  last,  we  shall 
find  that  it  has  through  all  its  \ariations  one  (piality 
which  is  constant — it  always  exists  as  an  appropri- 
ator  and  not  as  a  creator,  in  any  just  sense,  of  indus- 
try. Whatevei'  its  vehicle  or  its  victim  ;  whether  it 
adopts  the  single  corporate  structure,  or  unites  a 
number  of  corporate  structures  together  in  a  "  trust "  ; 
whether  it  preys  upon  the  raihvay,  or  upon  that 
bounty  which  the  government  aft'ords,  called  "  pro- 
tection," or  upon  m\y  branch  of  industry,  it  is  invaria- 


INFLUENCE   OF  THE  "TRUSTS"  1 47 

bly  and  by  supreme  motive  an  abstracter.  Its  favorite 
means  of  organization  is  tlirongli  the  corporate  struc- 
ture. It  is  possible  that  it  might  be  supported 
without  this,  yet,  so  far  as  development  shows 
its  great  efficiency  for  evil  has  been  due  to  that 
structure ;  and  I  doubt  whether  a  resort  to  individ- 
ual union,  either  by  copartnership  or  by  means  of  a 
"  trust "  based  only  on  individual  agreement,  would 
prove  successful.  I  believe  with  Mr.  Lecky,  that 
the  corporation  is  the  ideal  of  the  monopolist. 

Added  to  the  fact  of  this  appropriation  of  the 
property  of  others,  and  of  far  more  consequence  than 
this  fact  separately  considered,  is  the  influence  which 
the  parasite  necessarily  exerts  upon  the  body-politic ; 
its  far-reaching  effect  upon  the  moral,  political,  and 
economic  rights  of  every  citizen.  One  does  not  need 
the  gift  of  prophecy  to  predict  that  this  structure 
cannot  continue  if  liberty  is  to  endure  ;  no  trimming 
can  adapt  it  to  freedom.  The  peo^^le  of  the  oil 
regions  have  borne  the  baleful  influence  of  the 
"Standard  Trust,"  until  they  have  become  accus- 
tomed to  it,  if  not  submissive.  The  people  of 
Chicago  may  be  prosperous  enough  to  pay  the 
tribute  that  is  required  upon  the  immense  fiat-capi- 
talization which  has  been  fastened  upon  that  city ; 
the  people  of  the  whole  country  may  bear,  without 
at  first  seeming  severely  to  feel  them,  the  burdens 
which  come  from  the  indirect  exactions  of  the  para- 
site upon  the  railways  and  upon  the  cities ;  but  for 
all  this  the  crisis  must  inevitably  come — the  issue 


148  INDUSTRIAL   LIBERTY 

must  be  made  between  its  continued  existence  and 
the  continuance  of  freedom. 

Of  tlie  "  trust "  phase  of  the  parasite,  we  may  con- 
fidently hope  that,  if  courts  are  ever  established  with 
an  amplitude  of  power  to  examine  the  interior  of 
the  structure,  they  will  find  that  the  "  trust "  is  no 
longer  a  trust ;  that  there  can  be  no  such  thing  as  a 
"  trust "  which  involves  only  fidelity  in  the  division 
of  property  secretly  diverted  from  its  owners.  They 
will  find  that  the  real  trust  requires  not  only  faith  in 
custody,  but  honesty  of  management  throughout, 
always  for  the  beneficiary,  whether  his  interest  be 
direct  or  remote,  or  whether  he  be  present  or  absent ; 
and  that  there  can  be  no  "  trust  "  for  abstractino;  the 
goods  of  others  or  usurping  powers  which  belong  to 
the  public ;  that  to  name  such  a  thing  a  trust  is  as 
great  a  libel  on  the  sacred  character  of  fidelity,  as  to 
call  legitimate  that  conspiracy  which  binds  robbers 
together  for  the  division  of  their  booty.  When  this 
is  realized,  in  whatever  form  this  "  trust "  may  appear, 
it  will  be  recognized  as  the  great  abstracter  of  "  the 
earned  and  unearned  increment  "  of  industry,  the  vio- 
lator of  custody,  the  insidious  taker  of  the  livery  of 
the  real  trust  relation,  in  order  effectually  to  dis- 
tribute the  fruits  of  violated  trust. 

When  we  view  by  this  standard  the  enormous 
individual  accumulations  of  the  past  twenty  }-ears, 
and  their  influence  on  political  right  and  freedom, 
we  shall  better  realize  the  necessity  of  revising 
our   definitions   of    the   trust    I'elation.     The   pub- 


INFLUENCE   OF  IF  IE  "TRUSTS"  1 49 

lie  have  sliown  some  signs  of  beginning  to  realize  it, 
not  as  yet  through  a  careful  study  of  the  processes, 
but  largely  by  a  view  of  the  enormous  magnitude  of 
the  evil  results. 

I  have  thus,  at  the  risk  of  w^earying  my  readers 
and  with  some  repetition  not  altogether  unintended, 
sou2:ht  to  o-ive  illustrations  of  the  manner  in  which 
the  cor23oration  has  been  illicitly  employed  in  modern 
industry.  A  part  of  what  I  have  said  with  reference 
to  railway  management  and  parasitic  corporations 
has  at  different  times  heretofore  been  given  to  the 
public  with  more  or  less  particularity.  I  am  aware 
that  the  examples  I  have  given  may  not  be  abso- 
lutely accurate  in  every  particular  of  illustration. 
Still  I  think  they  will  be  found  as  exact  in  all  their 
details  as  it  is  possible  to  make  them  in  the  existing 
secrecy  of  management,  and  that  they  are  set  forth 
with  sufficient  definiteness  to  warrant  me  in  attribut- 
ing to  the  railway  and  parasitic  managements  the  evils 
which  I  have  pointed  out. 

The  hope  of  reform  which  has  accompanied  most 
of  the  attacks  upon  these  evils,  has  been  based 
upon  the  belief  either  that  the  corporate  manage- 
ment itself  may  be  impressed  with  the  gravity  of 
its  conduct,  and  thus  be  induced  to  inaugurate  re- 
form from  within,  or  that  the  government  should 
adopt  the  j^olicy  of  state  ownership  of  the  railways 
and  of  what  is  called  the  5'^^«s^-public  corporation  gen- 
erally. So  far  from  realizing  the  first,  I  conceive  it  to 
be  an  impossibility.    Whilst  individuals  are  sometimes 


I50  INDUSTRIAL   LIBERTY 

impressed  Avitli  the  error  of  tlieir  ways  and  induced 
to  change  their  courses,  no  such  effect  has  ever  been 
produced  upon  a  corporation  ;  at  least  I  do  not  be- 
lieve there  is  an  instance  of  any  corporation  becom- 
ing penitent  or  voluntarily  relaxing  its  power.  A 
disclosure  of  the  general  evils,  or  an  attack  upon  the 
specific  abuses  of  corporate  management  is  apt  to 
have  no  other  effect  than  to  make  the  managers 
more  circumspect,  formal,  and  secret  in  the  continu- 
ance and  enlargement  of  their  methods.  But  this 
I  shall  discuss  more  particularly  hereafter.  So  far 
as  State  ownership  is  concerned,  it  seems  to  me  ut- 
terly inconsistent  with  the  idea  of  a  republican  form 
of  government ;  because  it  implies  2:>aternal  and  pro- 
tective functions  which,  if  persisted  in,  would  be 
fatal  to  the  self-dependence  of  the  individual  citizen. 

My  purpose  in  setting  forth  these  examples  of 
parasitic  management  is  twofold :  first,  to  show  that, 
notwithstanding  the  exterior  and  functional  differ- 
ences of  these  various  parasites,  they  are  essentially 
and  intimately  related  to  each  other  as  growths  from 
a  common  beginning — the  corporate  structure ;  and 
second,  to  measure  the  qualities  of  this  structure  by 
the  definition  which  I  have  given  of  industrial 
liberty. 

The  (7?/r^s'/-public  corporation  is  an  industrial  in- 
stitution which  necessarily  possesses  functions  and 
powers  for  the  control  of  property  not  owned  by 
those  who  exercise  that  control.  If  the  broad  defi- 
nition of  trust  which  I  have  given  in  a  former  chapter 


INFL  UENCE   OF  THE  ''TRUSTS"  I  5  I 

is  correct,  then  the  manager  of  such  corporation  owes 
to  the  owners  of  that  property  a  duty  as  trustee. 
Besides  this,  if  my  broad  definition  of  trust  is  cor- 
rect, then  this  manager,  possessing  and  exercising 
functions  and  powers  which  also  necessarily  aifect 
the  political  right  of  the  citizen,  owes  to  the  citizen 
and  to  the  public  a  duty  as  trustee  in  the  exercise  of 
a  larger  trust  touching  the  individual  and  public 
political  right.  In  the  appropriation,  by  this  trus- 
tee, of  the  property  of  the  shareholders  of  such  a 
corporation,  immense  as  the  evil  of  that  malfeasance 
has  grown  to  be,  it  is,  after  all,  in  its  direct  import 
but  the  violation  of  a  lesser  trust.  The  indirect 
consequences  which  are  involved  in  this  violation, 
added  to  the  direct  interference  with  political  right, 
which  is  involved  in  the  violation  of  the  larger  trust, 
are  infinitely  more  dangerous  to  the  citizen  and  to 
the  State,  since  these  obstruct  political  well-being, 
and,  in  a  republic,  the  freedom  of  the  citizen. 

It  is,  then,  with  the  corporate  idea  itself,  in  its  re- 
lation to  political  right,  that  we  have  primarily  to 
deal.  Here  is  an  artificial  structure,  erected  by  the 
State,  within  the  State,  and  empowered  to  do  cer- 
tain things  in  the  exercise  of  its  normal  quasi-^VihMo 
functions  which  profoundly  affect  the  individual 
as  an  industrial  unit  and  the  sum  of  individuals — the 
public.  If  equal  political  right  is  to  be  maintained ; 
if  a  real  republic  is  to  be  preserved,  and  at  the  same 
time  the  corporate  structure  is  to  be  permitted  to 
exist,  then  the  exercise  of  its  powers  wherever  they 


152  INDUSTRIAL   LIBERTY 

affect  the  political  riglit  must  not  only  be  exactly 
defined,  but  must  be  under  tlie  constant  supervision 
and  inspection  of  the  State.  If  a  corporation  may 
be  allowed,  either  directly  or  indirectly,  in  a  single 
instance  to  disturb  or  interfere  with  the  industrial 
citizen  ;  to  take  directly  or  indirectly  from  one  and 
give  to  another,  whether  the  exercise  of  such  power 
be  under  the  pretence,  or  with  the  pui-pose,  of 
equalizing  industrial  interests  or  of  encouraging 
trade,  the  power  so  exercised  cannot  be  construed 
to  be  a  private  power.  It  is  a  power  which  neces- 
sarily includes  governmental  functions,  and,  if  it  be 
exercised  in  a  free  State,  it  cannot  be  exercised  other- 
wise than  as  a  trust ;  and  this  is  the  trust  that  needs 
to  be  defined.  It  is  not  by  vaguely  calling  it  "  a 
high  public  trust "  that  it  can  thus  be  defined,  but 
by  creating  for  it  precise  bounds,  and  exacting  specific 
performance.  For  what  kind  of  freedom  exists  in 
a  State  where  an  artificial  power  is  granted  by 
the  State  to  a  set  of  men  that  enables  them  to 
repress  the  industry  of  one  class  of  citizens  and 
to  promote  the  industry  of  another,  by  extending 
to  the  favored  class,  privileges  based  upon  a  sub- 
sequent secret  division  of  the  profits  of  the  indus- 
try, and  this  where  no  definite  accounting  is  re- 
quired from  them  in  the  exercise  of  this  power? 
What  kind  of  freedom  is  there  where  we  find  the  com- 
mands of  a  railway  combination  maintaining,  without 
specific  check,  a  consolidated  monopoly  of  one  great 
industry,  determining  when  it  shall  stand  idle,  fixing 


INFLUENCE   OF  THE  ''TRUSTS"  153 

arbitrary  limits  to  production  and  prices  of  staples  ? 
I  have  called  this  a  governmental  power ;  in  a  re- 
public it  is  far  more — it  is  '?^Z^5r(2-governmental.  And 
yet  this  is  the  power  which  the  railway  companies  of 
the  country,  unrestrained  by  specific  obligations  as 
trustees,  may  exercise.  It  is  the  power  which  these 
railways  have  thus  been  exercising,  with  a  constantly 
increasing  violence,  from  their  beginning  to  the 
present.  If  such  power  does  not  involve  a  usurp- 
ation of  the  sovereignty  of  the  State  and  of  the 
individual  industrial  rights,  there  can  be  no  such 
thing  as  usurpation.  If  it  does  not  involve  a  clear 
assumption  of  more  than  governmental  authority,  it 
is  difficult  to  conceive  what  could  be  a  trespass  upon 
any  authority. 

Let  me  repeat  that  the  trust  relation  cannot  be 
established  by  vague  generalities  or  declarations.  It 
is  necessary  that  there  should  be  clearly  indicated  a 
specific  course  of  performance,  based  upon  a  thorough 
realization  that  any  holder  of  the  property  or  rights 
of  another  is  a  real  trustee,  and  that  he  is  to  be  re- 
quired to  give  continued  account  of  his  stewardship. 
No  custodian  will  ever  learn  to  stand  in  awe  of  the 
simple  name  of  trustee,  nor  can  exact  performance  of 
his  duty  be  expected  of  him,  until  the  authority 
which  clothes  him  with  that  duty  comes  to  keep  sur- 
veillance over  its  whole  performance. 

That  which  American  civilization  is  confronted 
with,  then,  is  an  artificial  structure,  beginning  its 
aggressions  with  the  great  growth  of  modern  indus- 


154  INDUSTRIAL   LIBERTY 

try  by  the  exercise  at  first  of  small  acts  of  favoritism, 
which  have  gradually  grown  by  formal  organization 
into  a  persistent  and  regular  system,  until  it  has 
lowered  the  standards  of  commercial  and  personal 
integrity,  debased  the  sense  of  political  fi-eedom,  and 
plundered  the  public  for  the  enrichment  of  the  few. 
Its  charter  has  hitherto  been  treated  as  a  contract  and 
as  a  private  right  and  power,  and  the  sanction  of  con- 
cealment has  been  thrown  over  it.  It  has  not  become 
modified  by  the  grace  of  generosity,  but  remains  a 
corporate  tyrant.  Its  schemes  are  executed  with  an  im- 
personal inhumanity  for  which  no  one  of  the  actors  as 
an  individual  would  assume  the  responsibility.  This 
power  which  we  have  persisted  in  calling  private,  not- 
withstanding its  essentially  public  functions,  has  got- 
ten into  our  legislatures,  into  our  city  councils,  has  em- 
ployed our  bar,  has  seated  Judges  upon  our  benches, 
and  has  selected  its  special  agents  from  the  as- 
sumed custodians  and  delegates  of  the  public  right, 
who  Avere  chosen  for  the  protection  of  that  right.  Its 
whole  theory  lies  in  opposition  to  the  principle  of 
])olitical  liberty,  because,  unrestrained,  it  will  utterly 
break  down  the  constituents  of  that  liberty. 

If  after  we  consider  the  undemocratic  qualities, 
the  aggressive  processes  and  tendencies  of  the  cor- 
poration, we  still  determine  its  existence  to  be  an 
essential  for  the  support  of  modern  industry,  because 
we  have  nothing  to  take  its  place,  we  need  to  address 
ourselves  to  the  problem  of  bringing  it  as  far  as 
possible  within  the  subjection  of  equal  political  right 


INFLUENCE   OF  THE  ''TRUSTS"  1 55 

and  republican  sanction,  and  then  to  exact  from  it 
rigorously  all  that  is  necessary  to  keep  it  within  the 
bound  of  equal  right.  If  it  can  only  be  proj)erly 
administered  by  forbidding  its  alliance  with  what- 
ever clashes  with  the  performance  of  trust,  and  if 
from  its  function  it  is  necessarily  public,  then  our 
only  course  is  so  to  treat  it  and  to  bring  it  within 
legislative  and  judicial  control  as  a  public  trust. 

The  first  essential  step,  therefore,  is  by  legislation 
based  upon  a  careful  examination  of  the  facts — legis- 
lation which  shall  take  these  facts  from  their  present 
nebulous  position  and  place  them  within  the  region 
of  clear  definition — legislation  framed  in  the  spirit 
which  brought  forth  in  England  the  great  Statute 
of  Uses  of  Henry  VIII.,  and  the  Statute  of  Frauds 
of  Charles  IL' — which  shall  exactly  define  and 
limit  the  powers  and  duties  of  the  corporate  man- 
ager as  a  trustee,  both  for  private  profit  and  for 
public  right,  and  which  shall  provide  tribunals 
clothed  vnih.  ample  juiisdiction  to  secure  the  faithful 
performance  of  the  duties  so  defined.  I  think  we 
may  be  aided  in  this  course  by  bearing  in  mind  how 
essentially  artificial  the  corporation  is ;  that  its  be- 
ginning is  not  in  the  Anglo-Saxon  or  the  English  law  ; 
that  it  is  an  exotic ;  that  it  was  imported  by  the 
ecclesiastics  into  England,  administered  for  absorp- 

'  Lord  Campbell  ("  Lives  of  the  Chancellors,"  vol.  III.,  p.  423)  terms  the 
Statute  of  Frauds  of  Charles  II.  "  the  most  important  and  beneficial  piece 
of  judicial  legislation  of  which  we  can  boast."  Blackstone  ("  Com- 
mentaries"  vol.  IV.,  p.  439)  calls  it  "  a  great  and  necessary  security  tu 
private  property." 


156  INDUSTRIAL   LIBERTY 

tioii  and  aggressioD,  and  that,  unrestrained,  it  is  not 
and  never  was  consonant  with  liberty.  It  was  only 
when  it  "sv^as  subjugated  by  the  government  of  Eng- 
land, and  thoroughly  secularized,  that  it  became 
a  promoter  of  industrial  civilization.  In  its  mod- 
ern and  enlarged  use,  new  evils  have  grown  with 
it.  It  has  been  made  the  vehicle  of  frauds  and 
diversions  unknown  to  the  simpler  habits  of  the 
Common  Law,  and  which  are  un})rovided  for  by  that 
law.  We  need  therefore,  as  I  have  before  said, 
some  Lord  Nottingham  to  institute  for  this  trust- 
relation,  in  its  larger  and  more  public  field,  those 
guards  which  he  established  foi*  it  in  its  narrower 
and  private  field.  In  other  words,  we  need  the  ap- 
plication of  the  same  principles  which  he  defined, 
to  the  new  and  enlarged  relations  which  modern 
industry  has  created.  Our  progress  toward  real  re- 
form can  never  really  begin  until  we  can  apply  the 
remarks  which  Chief-Justice  Mansfield  made  of 
Nottingham '  to  some  such  leader  in  this  larger  field. 
Whilst  no  single  act  of  legislation  can  accomplish 
the  result ;  whilst  it  may  be  necessary  to  deal  with 
multitudinous  details,  nevertheless  there  must  be  the 
pervading  principle  that  the  railway  management 
and  the  management  of  all  corporations  which  come 
in  contact  with  industrial  and  political  right  shall 
be  placed  clearly  in  a  relation  of  trust,  in  Avhich  all 
motives  inconsistent  with  faithful  public  service  and 
public  convenience  are  eliminated, — in  a  word,  where 

'  See  ante,  p.  8g. 


INFLUENCE   OF  THE  "TRUSTS"  15/ 

the  custodian  shall  be  held  as  strictly  accountable 
as  the  Secretary  of  the  Treasury  is  now  held, — then 
and  not  sooner  there  will  be  a  beginning  of  the  re- 
turn toward  that  political  condition  in  which  the 
individual  citizen  is  protected  in  his  equal  political 
right.  There  are  some  of  our  industrial  corporations 
sorae^v'hat,  although  not  altogether,  analogous  to  the 
railway  corporation,  which  furnish  instances  of  the 
clear  definition  and  careful  governmental  control  of 
the  administration  of  trust  by  the  officers  of  these  cor- 
porations/  These  instances  were  born  of  the  realized 

'  The  Chemical  National  Bank  of  New  York  has,  as  a  matter  of  fact, 
not  nearly  so  public  a  relation  as  the  railways  have, — as  many  other  corpo- 
rations have.  It  has  a  capital  of  three  hundred  thousand  dollars.  Its  de- 
posits amount  to  fifteen  or  twenty  millions.  But  the  relations  of  its 
officers  are  recognized  as  well-defined  relations  of  trust  ;  not  only  to  the 
shareholders,  but  to  the  public  as  well  ;  and  this  public  relation  is  pro- 
moted by  government  inspection,  not  simply  to  secure  any  direct  interest 
the  government  can  have,  but  to  secure  fidelity  in  the  performance  of 
the  duty  involved  in  the  larger  trust.  What  would  be  thought  of  the  presi- 
dent of  this  bank  if  he  were  able  to  say  to  his  associates  :  "  The  share- 
holders will  expect  six  per  cent,  dividend  on  their  shares.  The  deposits 
which  we  have  enable  us  to  make  a  vast  amount  beyond  this.  Let  us, 
therefore,  create  parasite  organizations  by  which  we  shall  conceal  the 
profits  and  divert  them  from  the  shareholders  to  ourselves  ? "  What 
would  be  the  influence  of  such  conduct  upon  the  general  credit  of  the 
country  ?  What  would  be  thought  of  a  representative  in  Congress  who 
would  ally  himself  with  such  a  parasitic  corporation  to  secure  legislative 
form  for  it,  for  abstracting  the  fruits  of  the  bank  from  the  share- 
holding ownerships,  and  for  degrading  the  sanctity  of  general  credit  ? 
Yet,  there  is  no  difference  between  the  motive  thus  suggested  and  the  mo- 
tive which  has  prompted  similar  combinations  for  abstracting  property 
from  the  railways  and  interfering  with  the  rights  of  the  public.  And 
what  is  there  to  prevent  such  abstraction,  except  the  clear  recognition  of 
the  trust-relation  by  governmental  supervision  ?  It  must  be  seen  that  the 
difference  between  the  two  comes  largely,  if  not  wholly,  not  from  the  dif- 
ference of  the  subject-matter,  but  from  the  different  realization  which  the 


158  INDUSTRIAL   LIBERTY 

necessities  of  the  case,  and  they  in  some  measure 
afford  illustrations  of  what  may  be  accomplished 
in  the  larger  field.  Between  the  present  and  this 
ultimate  accomplishment  there  are  a  number  of  ob- 
stacles to  be  overcome,  the  more  prominent  of  which 
I  will  proceed  to  indicate. 

public  has  of  the  two  relations.  It  is  not  enough  that  a  deposit  of  bonds 
is  required  to  secure  the  note-holder  and  depositor  ;  beyond  this  the  gov- 
ernment exercises  the  power  of  inspection  ;  and  this  is  to  secure  the  per- 
formance of  the  duties  of  the  officers,  not  simply  as  private  custodians,  but 
as  custodians  who  have  the  duties  of  a  larger  trust  to  perform. 


CHAPTER  Vr 

OBSTACLES    IN    THE    WAY    OF    REFORM 

Among  tlie  causes  operating  as  deterrents  to  indus- 
trial reform,  there  are  four  which  are  prominent  and 
which  may  be  stated  as  follows :  first,  that  which 
exists  in  the  insufficiency  of  the  jurisdiction  and 
powers  of  the  established  Judicial  tribunals ;  second, 
the  opposition  of  the  corporation  that  is  immedi- 
ately to  be  reformed  ;  third,  the  organized  character 
of  the  mischiefs  in  question ;  and  fourth,  the  state  of 
public  opinion  with  reference  to  these  mischiefs, — 
the  failure  on  the  part  of  the  public  to  realize  them, 
and  therefore  to  devise  the  necessary  remedies. 
These  I  shall  proceed  to  examine  in  this  and  the  fol- 
lowing chapter. 

The  creation  of  the  Inter-State  Commerce  Commis- 
sion, viewed  from  a  legal  standpoint,  is  in  many  re- 
spects an  unique  piece  of  legislation.  It  may  also  be 
said  to  indicate  a  dawning  perception  that  existing 
constitutional  guards  are  not  altogether  sufficient  to 
meet  all  of  the  necessities  of  reform.  While  the  es- 
tablishment of  this  Commission  thus  marks  an  initial 
era  and  indicates  a  growing  interest  in  the  question  of 
reform,  it  cannot  be  regarded  as  any  thing  more  than 

159 


l6o  INDUSTRIAL   LIBERTY 

tentative.  Strictly  considered,  it  owes  its  being 
to  a  strained  construction  of  that  clause  of  tlie 
Constitution  wliicli  provides  for. the  regulation  of 
commerce  between  States,  since  this  clause  was  ob- 
viously intended  only  to  extend  the  federal  author- 
ity to  the  control  of  imports  and  duties,  and,  it  may 
be,  to  such  further  control  as  is  necessary  to  preserve 
the  freedom  of  the  water-courses.  It  certainly  seems 
like  a  strained  construction  to  assume  that  the  con- 
stitutional power  conferred  upon  Congress,  of 
regulating  inter-State  commerce  relations,  will 
warrant  the  controilino;  of  commerce  between  the 
States  ;  and  not  only  thi^,  but  that  Congress  may  del- 
egate this  power  to  a  permanent  commission,  and 
thus  confer  upon  that  commission  the  authority  for 
controlling  the  rates  and  charges  of  common  carriers, 
and  all  the  details  by  which  their  business  is  con- 
ducted. It  can  hardly  be  conceived  that  it  was  the 
intention  of  the  f  ramers  of  the  Constitution  to  enable 
Congress  to  confer  such  unbounded  supervision 
upon  a  permanent  commission.  This  does  not  imply 
that  such  supervision  is  not  in  present  conditions 
necessary,  but  it  does  impl}'  that  these  conditions 
had  no  existence  at  the  time  of  the  formation 
of  the  Constitution,  and  it  is  not  possible  that  they 
could  have  been  thought  of.  There  Avas  nothing  at 
that  time  which  indicated  that  small  bodies  of  cor- 
porate officials  would  arise  in  the  progress  of  railway 
development,  having  direct  interests,  acting  under 
centralized  and  often  secret  authority,  and  to  a  large 


OBSTACLES  IN  THE   WAY  OF  REFORM  lOI 

extent  necessarily  controlling  commerce.  Nor  was  it 
foreseen  that  in  such  a  condition  such  organizations 
of  officials,  as  pointed  out  by  Mr.  Spencer,  would 
possess  an  immense  advantage  over  that  incoherent 
public  which  is  brought  to  act  unitedly  only  under 
strong  provocations ;  nor  that  in  their  progressive 
growth  they  would  become  less  ^and  less  resistible 
by  this  general  public. 

But  granting  tile  power  of  Congress  over  the  mat- 
ter, and  the  right  to  delegate  this  authority  to  a  com- 
mission, the  question  arises,  what  is  the  quality  of 
this  Commission  by  the  terms  of  the  enactment  cre- 
atins;  it  ?  It  cannot  be  called  either  a  Common  Law 
or  a  Constitutional  Court,  for,  although  it  is  given 
power  to  inquire,  "  to  investigate,"  and  to  make  re- 
port in  writing,  "  including  findings  of  fact,  together 
wdth  its  recommendations,"  all  of  which  power  is 
judicial,  it  yet  lacks  jurisdiction  to  determine  contro- 
versies between  litigants,  and  to  enforce  the  recom- 
mendations which  it  is  authorized  to  make.  Not 
being  a  court,  it  cannot  have  the  powers  of  a  court, 
except  in  so  far  as  they  are  expressly  delegated  to  it 
by  the  act  of  its  creation  ;  and  therefore  its  jurisdic- 
tion is  deficient  in  comprehensiveness.  It  lacks  not 
only  the  power  of  enforcing  its  findings,  but  also  the 
power  of  thorough  investigation,  since  it  cannot  com- 
pel the  production  of  all  that  is  necessary  for  such  an 
investigation.  And  as  the  questions  most  likely  to 
come  before  such  a  tribunal  are  of  a  secret  nature,  in 
which  identical  intei^ests  are  adroitly  concealed  in 


1 62  INDUSTRIAL   LIBERTY 

separate  and  seemingly  iudej)endent  corporate  struc- 
tures, wliere  such  concealment  is  made  for  the  very 
purpose  of  evading  investigation,  this  inadequacy  is 
especially  unfortunate.  In  the  case  of  another  com- 
mission, lately  appointed  by  Congress,  which  was 
vested  mth  powers  as  great  as  those  conferred  upon 
the  Inter-State  Commerce  Commission,  the  effort 
made  through  an  application  to  the  United  States 
Circuit  Court  to  bring  forth  facts  from  an  un^villing 
witness  Avas  unsuccessful.  The  Court  held  not  only 
that  the  Commission  had  not  the  power,  but  that 
it  was  not  in  the  power  of  the  Court  itself,  to  per- 
form the  service  for  the  Commission.' 

'  In  the  matter  of  the  application  of  the  Pacific  Railway  Commission  to 
the  Circuit  Court  of  the  United  States  for  the  Northern  District  of  Cali- 
fornia, decision  rendered  August  29,  18S7.  (Reported  in  32  Federal 
Reporter,  p.  241.) 

This  was  an  application  by  a  commission  created  by  Congress  for  the  in- 
vestigation of  books,  accounts,  and  methods  of  the  railroad  which  received 
aid  from  the  United  States,  for  an  order  requiring  a  witness  to  answer  cer- 
tain interrogatories  propounded  to  him.  The  act  empowered  the  Commission 
"  to  require  the  attendance  and  testimony  of  witnesses,  and  the  production 
of  all  books,  papers,  agreements,  contracts,  and  documents,  relating  to  the 
matter  under  investigation,  and  to  administer  oaths  ;  and  to  that  end  it  may 
invoke  the  aid  of  any  court  of  the  United  States,  in  requiring  the  attend- 
ance of  witnesses,  and  the  production  of  books,  papers,  and  documents." 
It  further  declares  that  "  any  Circuit  or  District  Court  of  the  United  States, 
within  the  jurisdiction  of  which  such  inquiry  is  carried  on,  may,  in  case  of 
contumacy  or  refusal  to  obey  a  subpoena  issued  to  any  person,  issue  an  or- 
der requiring  such  person  to  appear  before  said  commissioners,  and  produce 
books  and  papers  if  so  ordered,  and  give  evidence  touching  the  matter  in 
question  ;  and  any  failure  to  obey  such  order  of  the  Court  may  be  pun- 
ished by  such  Court  as  contempt  thereof."  And  also  that  "  the  claim  that 
any  such  testimony  or  evidence  may  tend  to  criminate  the  person  giving 
such  evidence,  shall  not  excuse  such  witness  from  testifying,  but  such  evi- 
dence or  testimony  shall  not  be  used  against  such  person,  on  the  trial  o£ 
any  criminal  proceeding." 


OBSTACLES  IN  THE    WAY   OF  REFORM  1 63 

If  it  be  the  function  of  courts  to  determine  exact 
justice  between  man  and  man,  tlie  essential  pre- 
requisite for  this  is  the  power  to  acquire  eveiy  fact 
which  is  necessary  for  that  determination.  If,  in  a 
larger  sense,  it  be  the  function  of  any  power  in  a  free 
state  to  preserve  as  far  as  possible  unimpaired  the 
individual  freedom  of  the  citizen,  such  a  power  must 
be  capable  of  reaching  any  insidious  secrets  by  which 
that  freedom  is  threatened  or  attacked.  The  veiy 
preliminary  for  the  reform  of  any  existing  evil,  or  for 
the  restraint  of  any  aggressive  attempts  by  the  hold- 
ers of  any  franchise,  is  the  clear  power,  somewhere 
lodged  and  always  ready  for  exercise,  of  searching 

The  witness,  Mr.  Leland  Stanford,  president  of  the  Central  Pacific  Rail- 
road Company,  refused  to  answer  the  question  whether  any  part  of  the 
sum  mentioned  in  certain  vouchers  had  been  paid  for  the  purpose  of  influ- 
encing legislation,  and  the  commissioners  applied  to  the  Court  for  an  order 
under  the  act  of  Congress. 

Mr.  Justice  Field,  in  delivering  the  opinion  of  the  Court,  denied  the 
motion.  Among  the  reasons  set  forth  for  the  denial  is  that  :  "  The  Pacific 
Railway  Commission,  created  under  the  act  of  Congress  of  March  3,  1887, 
is  not  a  judicial  body  ;  it  possesses  no  judicial  powers  ;  it  can  determine  no 
rights  of  the  government,  or  of  the  companies  whose  affairs  it  investigates. 
Those  rights  will  remain  the  subject  of  judicial  inquiry  and  determination, 
as  fully  as  though  the  commission  had  never  been  created." 

Under  the  authority  of  the  decision  neither  Congress  nor  any  investi- 
gating commission  appointed  by  it  has  power  to  assume  judicial  functions, 
or  to  punish  witnesses  for  contempt  when  they  refuse  to  answer  interroga- 
tories propounded,  calling  for  books  or  papers. 

The  Court  further  says  :  "  The  law  provides  for  the  compulsory  pro- 
duction, in  the  progress  of  judicial  proceedings,  or  by  direct  suit  for  that 
'purpose,  of  such  documents  as  affect  the  interest  of  others  ;  and  also,  in 
certain  cases,  for  the  seizure  of  criminating  papers,  necessary  for  the  pros- 
ecution of  offenders  against  public  justice  ;  and  only  in  one  of  these  ways 
can  they  be  obtained,  and  their  contents  made  known,  against  the  will  of 
the  owner."  (Citing  Boyd  vs.  United  States,  116  U.  S.,  616  ;  and  Kilbourn 
vs.  Thompson,  103  U.  S.,  168.) 


164  INDUSTRIAL    LIBERTY 

out  and  detecting  all  that  is  essential  to  determine 
the  relations,  not  only  between  particular  suitors, 
but  also  the  relation  between  those  who  hold  such 
franchise  and  the  citizens  of  the  republic. 

Que  example  of  the  limits  of  the  functions  of  the 
Inter-State  Commerce  Commission  may  be  given  by 
reference  to  a  number  of  cases  which  lately  came  be- 
fore that  Commission,  in  all  of  which  the  "  Standard 
Oil  Trust,"  although  not  a  party  of  record,  was  the 
real  party  mainly  involved.  These  cases  are  entitled 
"  Rice  v.  Louisville  and  Nashville  R.  R.  Co.  et  aV 
The  plaintiff  was  the  same  in  all  the  cases ;  and  as 
the  questions  at  issue  were  to  a  considerable  extent 
identical,  they  were  by  agreement  tried  together. 
The  particular  shipping  parties  to  whom  the  dis- 
criminations were  shown  to  have  been  directly  given 
were  the  Standard  Oil  Company  of  Kentucky  and  the 
Walters-Pierce  Company  of  St.  Louis,  two  corpora- 
tions which  seemed  to  all  outward  appearance  to  be 
entirely  independent  existences.  These  contracted  ap- 
parently for  themselves  with  the  managers  of  the 
railways,  and  the  investigation  before  the  Commis- 
sion was  confined,  therefore,  to  considering  the  con^ 
tracts  between  the  railways  and  these  pai'ticular 
companies.  But,  as  was  incidentally  developed,  the 
Standard  Oil  Company  of  Kentucky  and  the  Wal- 
ters-Pierce Oil  Company  of  St.  Louis  were  not  inde- 
pendent companies.  They  were,  in  fact,  simply  con- 
duits of  the  "  Standard  Oil  Trust  "  ;  or  rather  they 
were  the  means  through  which  contracts  might  be 


OBSTACLES  IN  THE   WAY  OF  REFORM  1 65 

made  wliicli  could  on  occasions  be  exliibited  without 
danger.  Their  contracts  made  directly  with  the 
railways  did  not  by  any  means  show  all  that  there 
was  in  the  cases.  So  far,  then,  as  the  proceedings 
before  the  Commission  went,  they  were  limited  to 
the  development  of  discriminations  w^hich  were  made 
to  these  two  ancillary  corporations,  under  contracts 
between  them  and  the  railways,  by  the  officers  of  the 
different  railways.  The  discriminations  were  shown 
to  consist  partly  in  furnishing  to  these  minor  corpo- 
rations the  privilege  of  shipping  oil  in  tank-cars  be- 
longing to  them  as  against  the  independent  shipper, 
whose  shipments  were  made  in  barrels.  There  were 
discriminations  of  several  kinds.  One  consisted  in 
making  a  greater  charge  for  a  hundred  pounds  of 
oil  shipped  by  barrel  than  on  the  same  quantity 
shipped  by  tank-cars.  Another  method  was  indirect : 
it  consisted  in  a  purposed  neglect  by  the  officers  of 
the  railways  to  indicate  or  notice  the  capacity  of  the 
different  cars  belonging  to  the  favored  corporations, 
some  of  which  were  twdce  as  great  as  others. 
Through  this  means  the  favored  tank-car  shippers 
were  enabled  at  times  to  ship  as  much  as  double  the 
quantity  charged  for.'    Another  advantage  consisted 

'  Since  the  passage  of  the  Inter-State  Commerce  Act  it  has  become  quite 
common  for  shippers,  in  collusion  with  the  railway  managers,  to  misrepre- 
sent the  character  and  weight  of  the  goods  forwarded  over  the  road.  The 
practice  is  popularly  called  "  underbilling."  Mr.  Fink,  in  a  letter  to  Sen- 
ator Cullum,  Chairman  of  the  Senate  Inter-State  Commerce  Committee, 
treats  this  subject  with  his  accustomed  candor.     He  says  : 

"  This  practice  has  been  in  operation  for  a  long  time  ;  but  since  the  en- 
actment of  the  Inter-State  Commerce  Law  it  has  greatly  increased,  and  has 


1 66  INDUSTRIAL   LIBERTY 

in  abatements  to  the  favored  corporations,  on  account 
of  the  stationary  tanks  which  were  erected  by  them 
at  the  termini  of  the  roads,  for  receiving  and  storing 

in  a  great  measure  taken  the  place  of  the  payment  of  rebates.  It  has  the 
same  effect,  only  differing  in  method,  and  results  in  unjust  discrimination, 
which  is  forbidden  by  the  Inter-State  Commerce  I.aw.  For  this  reason  the 
attention  of  the  Inter-State  Commerce  Commission  has  been  called  to  this 
matter  ;  and  the  question  how  to  prevent,  by  proper  legislation,  this  viola- 
tion of  the  spirit  and  intent  of  the  Inter-State  Commerce  Law,  is  worthy 
of  the  consideration  of  your  Committee. 

"  There  are  two  distinct  features  of  this  practice  to  be  noted  :  first, 
when  the  motive  of  the  shipper  is  simply  to  cheat  the  railroad  companies 
and  to  prevent  them  from  collecting  for  their  services  the  charges  according 
to  the  open  tariffs  filed  with  the  Inter-State  Commerce  Commission  ;  sec- 
ond, when  freight  is  underbilled,  or  the  character  of  goods  misrepresented, 
by  an  understanding,  direct  or  implied,  with  the  carriers,  to  secure  the 
business  of  certain  shippers  in  competition  with  other  carriers,  thus  favor- 
ing one  shipper  as  against  another. 

"  In  either  case  the  effect  upon  the  honest  shipper  who  represents  his 
shipments  correctly,  and  who  is  not  favored  by  such  understanding,  is  the 
same.      It  is  unjust  discrimination  forbidden  by  law. 

"  It  may  be  said  that  so  far  as  the  railroads  themselves  are  concerned, 
they  are  able  to  protect  themselves  against  this  misrepresentation  by  exam- 
ining and  weighing  all  goods.  This  is  true  to  a  certain  extent.  There  are 
a  great  number  of  railroad  companies  who  have,  individually  and  in  concert 
with  each  other,  endeavored  to  do  this,  and  have  established  for  that  pur- 
pose inspection  and  weighing  bureaus  at  some  important  points  ;  but  it  has 
been  found  impracticable  to  weigh  and  inspect  all  goods  offered  for  ship- 
ment. At  New  York,  Chicago,  Indianapolis,  St.  Louis,  and  other  points 
such  inspection  bureaus  have  existed  for  some  time  past,  and  they  have  to 
some  degree  accomplished  their  purpose  ;  but  the  amount  of  freight  so 
inspected  is  only  a  small  jjortion  of  tlie  whole  intcr-state  traffic  of  the 
country. 

"  It  would  appear  at  first  sight  very  simple  for  the  railroads  to  control 
this  matter,  if  they  so  desired  ;  but  there  are  so  many  competing  roads,  and 
among  them  some  roads  which  do  not  want  to  control  it.  How  can  the 
roads  which  are  willing  and  anxious  to  do  it  force  those  which  are  not  ? 
There  is  no  law  to  compel  them.  The  inter-state  law  forbids  the  use  of 
any  device  by  which  one  shipper  may  secure  more  favorable  terms  than 
another  for  like  services  ;  but  it  does  not  command  the  railroads  to  inspect 


OBSTACLES  IN  7UIE    IVA  Y   OF  REFORM  1 6/ 

their  shipments.  And  still  another  advantage  to 
these  favorites  consisted  in  an  allowance  for  mileage, 
made  by  special  arrangement  for  the  use  of  the  tank- 

and  correctly  weigh  every  parcel  of  goods  to  be  forwarded  by  them  ;  nor 
would  it  be  practicable  to  execute  such  a  law  if  it  were  enacted,  without 
greatly  obstructing  the  prompt  movement  of  the  traffic  of  the  country. 

"  It  is  in  the  very  nature  of  the  case  that  the  carrier  must  to  a  consider- 
able extent  rely  upon  the  representations  made  by  the  shippers  ;  and  while 
there  are  many  honest  merchants  who  will  not  attempt  to  misrepresent, 
there  are  others  who  will  avail  themselves  of  every  opportunity  to  do  so. 
The  honest  merchant  suffers  by  the  practice  of  the  dishonest  merchant,  with 
whom  he  is  unable  to  compete  on  equal  terms. 

"  It  makes  no  difference  whether  these  misrepresentations  in  weights  and 
the  character  of  freight  are  made  for  the  simple  purpose  of  cheating  the 
railroad  companies,  or  whether  they  are  countenanced  and  not  resisted  by 
the  railroad  companies  for  the  purpose  of  securing  the  traffic  of  certain 
large  shippers,  in  competition  with  other  carriers  ;  the  result  is  exactly  the 
same — unjust  discrimination.  This  practice  is  a  much  more  objectionable 
one  than  the  former  practice  of  paying  rebates,  because  it  is  much  more 
difiicult  of  detection." 

Mr.  Fink  suggests  the  following  as  a  remedy  for  this  evil. 

"  In  my  opinion,  as  well  as  in  that  of  many  railroad  managers  and  a 
great  many  merchants  with  whom  I  have  conversed  on  the  subject,  a  law 
should  be  passed  by  Congress  making  the  intentional  misrepresentation 
of  the  weight  and  character  of  the  shipments  on  the  part  of  the  shipper 
illegal  and  punishable  by  fine.  The  Inter-State  Commerce  Law  already 
prohibits  railway  companies  from  resorting  to  these  devices  ;  but  it  might 
also  be  desirable  to  make  the  law  more  specific  on  this  point. 

"  Such  a  law  would  have  a  great  moral  effect  with  law-abiding  citizens. 
At  present  to  misrepresent  the  weight  or  the  character  of  shipments  is  not 
considered  by  a  great  many  people  as  in  any  way  reprehensible  or  immoral ; 
but  the  legal  condemnation  of  this  practice  would  deter  a  great  many  from 
continuing  it.  It  would  have  the  same  effect  upon  the  railroad  companies 
who  now  for  selfish  purposes  countenance  or  encourage  the  practice.  It 
would  further  have  the  effect  of  strengthening  the  railroad  companies  in 
their  voluntary  efforts  to  correct  these  evils."  (See  "Correspondence  on  the 
subject  of  legislation  to  prohibit  misrepresentation  on  the  part  of  shipper 
of  character  and  weight  of  goods,"  between  Mr.  Albert  Fink  and  Senator 
S.  M.  Cullum,  Chairman  of  the  Senate  Inter-State  Commerce  Committee, 
March  7,  1S88.) 

This  "  underbilling, "  as  will  thus  be  seen,  is  but  another  form  of  discrimi- 


1 68  INDUSTRIAL  LIBERTY 

cars  by  tlie  railways.  Besides  this  it  was  developed, 
rather  incidentally,  in  the  course  of  the  investigation, 
that  the  railway  companies  were  in  the  habit  of  using 
the  tank-cars  for  the  shij^ment  of  return  freight  of 
cotton-seed  oil.  The  rate  charged  on  this  return 
freight  was  so  low  as  to  appear  mysterious  to  the 
Commission,  since  the  commissioners  say  concerning 
it :  "  This  charge,  for  some  reason  not  satisfactorily 
explained  to  the  Commission,  is  made  astonishingly 
low  when  compared  with  the  charge  made  on  petro- 
leum, although  the  cotton-seed  oil  is  the  much  more 
valuable  article.  It  is  very  manifest  from  the  evi- 
dence that  the  cotton-seed  oil  traffic  in  itself  is  not 
one  of  much  profit  to  these  defendants  " — the  rail- 
ways. 

Altogether,  these  cases  were  very  much  more  sig- 
nificant in  indicating  certain  concealed  relations 
between  the  favored  shipper  and  the  railway  mana- 
gers than  in  any  proofs  which  they  furnished  of 
discrimination.  Their  whole  tenor  exhibited  an  un- 
mistakable disposition,  upon  the  part  of  the  officers 
of  the  railways,  to  lean  to  the  interests  of  the  "  Stand- 
nation,  a  device  to  evade  the  legislative  enactment  that  is  intended  to  correct 
the  abuse.  It  seems  tome  that  nothing  can  be  more  obvious  than  that  this 
evasion  exhibits  a  condition  of  management  for  which  no  remedy  can  be 
effective  that  does  not  include  systematic  inspection  ;  or,  in  other  words, 
that  does  not  deal  with  the  railway  manager  as  trustee  for  tlic  performance 
of  that  lesser  and  larger  trust  which  I  have  hitherto  defined. 

There  is  jjcnding  before  the  United  States  Senate  an  amendment  to  the 
Inter-State  Commerce  Bill,  which  aims  to  prevent  this  form  of  discrimina- 
tion. It  prescribes  certain  penalties  for  the  various  kinds  of  "  underbill- 
ing,"  but  It  does  not  provide,  as  it  seems  to  me,  for  such  comprehensive 
inspection  as  is  necessary  to  correct  the  evil. 


OBSTACLES  IN  THE   WAY  OF  /REFORM  169 

ard  Oil  Trust "  as  against  the  independent  or  com- 
petitive shippers.  It  was  clear  that,  in  all  of  their 
intercourse,  the  officers  of  the  railways  intended  to 
make  it  easy  for  this  ''  Trust  "  to  do  business  through 
its  ancillary  corporations  over  the  roads,  and  difficult, 
if  not  impossible,  for  every  other  shij)per/  From 
all  the  indications,  it  appeared  that  the  real  wrong- 
doers were  not  the  parties  who  were  made  the  de- 
fendants to  the  case,  and  that  the  contracts  therefore 
which  were  essential  to  a  determination  of  the  whole 
question  of  discrimination,  being  between  parties  who 
were  not  before  the  court,   were  not  produced.     If, 

'  The  following  is  a  significant  instance  of  this  given  in  the  opinion  of 
the  Commission  : 

■'  Nothing  in  these  cases  more  distinctly  challenges  attention  than  the 
fact  that  several  of  the  defendants,  while  giving  tank  rates  regardless  of 
the  quantity  carried,  informed  complainant,  when  interrogated  by  him  on 
the  subject,  that  if  the  quantity  exceeded  a  certain  specified  weight,  a 
charge  would  be  made  for  the  excess.  The  published  rate-sheets  ought  to 
have  given  clear  and  reliable  information  on  the  subject  ;  and  it  was  only 
because  they  were  silent  or  ambiguous  that  the  inquiries  became  necessary. 
The  remarkable  thing  about  the  matter  is  that  so  many  of  these  defendants 
should  make  the  same  mistake  ;  a  mistake,  too,  that  it  was  antecedently 
so  improbable  any  of  them  would  make.  The  Louisville  and  Nashville, 
the  Cincinnati,  New  Orleans  and  Texas  Pacific,  the  Newport  News  and 
Mississippi  Valley,  and  the  Illinois  Central  companies  are  all  found  giving 
out  the  same  erroneous  information,  and  no  one  of  them  can  tell  how  or 
why  it  happened  to  be  done  ;  much  less  how  so  many  could  contempora- 
neously, in  dealing  with  the  same  subject,  fall  into  so  strange  an  error.  It 
is  to  be  noted,  too,  that  it  is  not  a  subordinate  agent  or  servant  who  makes 
the  mistake  in  any  instance,  but  it  is  the  man  at  the  head  of  the  traffic  de- 
partment, and  whose  knowledge  on  the  subject  any  inquirer  would  have  a 
right  to  assume  must  be  accurate.  In  no  case  is  the  error  excused,  and  if 
it  be  conceded  that  there  was  no  purpose  to  mislead,  the  case  is  not  re- 
lieved of  unpleasant  features,  for  gross  negligence,  when  it  is  damaging, 
may  be  equally  culpable  with  wrongs  of  intent." — "  Inter-State  Commerce 
Reports,"  Vol.  I.,  \).  753. 


I/O  INDUSTRIAL  LIBERTY 

as  all  the  indirection  indicates,  the  real  inner  contract 
for  discrimination  was  not  that  which  was  made  be- 
tween these  ancillary  corporations  and  the  railways 
proper,  but  one  which  existed  between  the  "Stand- 
ard Oil  Trust "  and  the  officers  and  managers  of 
the  railways,  and  if  therefore  it  is  between  the 
"  Trust "  and  these  manao-ers  that  the  accounts  for 
discrimination  are  at  last  to  be  adjusted,  they  may 
be  found  to  provide  for  salaries  and  bonuses  paid  by 
the  "  Trust "  to  the  officers,  which  purchased  the  in- 
fidelity of  the  railway  managers  to  the  shareholders 
of  the  corporation.  If  this  is  the  case,  the  railway 
companies  proper  instead  of  being  aggressors  are 
victims. 

If  we  accept  these  indications,  we  have  a  rational 
explanation  of  the  studied  ignorance  of  the  railway 
officials  as  to  the  capacity  of  the  cars,  as  well  as  an 
explanation  of  the  insidious  favors  that  these  mana- 
gers were  constantly  affording  to  the  shipping  cor- 
porations which  belong  to  the  "  Trust,"  and  of  the 
insidious  obstructions  that  the  same  managers  were 
constantly  throwing  in  the  way  of  every  indepen- 
dent and  competitive  shipper.  Moreover,  they 
point  with  significance  to  that  circumstance  which 
seemed  so  puzzling  to  the  Commission;  viz.,  that 
the  railway  companies  without  apparent  motive 
persisted  in  carrying  return  freights  of  cotton-seed 
oil  at  rates  so  low  as  to  be  absolutely  profitless.  If 
there  should  exist  between  the  "  Standard  Oil  Trust," 
the  "Cotton-seed  Oil  Trust"  (which  is  the  shipper 


OBSTACLES  IN   THE   WAY   OF  REFORM  17I 

of  the  cotton-seed  oil  freights),  and  the  managers  of 
the  railways,  a  contract  which  provides  that  the 
"  Cotton-seed  Oil  Trust "  shall  account  to  the  "  Stand- 
ard Oil  Trust "  at  a  very  high  I'ate  for  the  use  of 
the  cars  for  the  shipment  of  the  cotton-seed  oil  to 
the  North,  and  that  meanwhile  the  "  Cotton-seed 
Oil  Trust  "  shall  pay  to  the  railway  companies  a  very 
small  amount  of  freight  for  shipment,  there  is  a 
manifest  advantao-e  in  the  arransfement  to  the  "  Stand- 

o  o 

ard  Oil  Trust"  as  a  shipper  of  petroleum.  In  other 
words,  here  is  a  place  for  concealment  of  discrimi- 
nation, in  contracts  which  were  not  and  could  not 
AN'ell  be  brought  before  the  Commission — a  discrimi- 
nation in  favor  of  the  "  Standard  Oil  Trust "  and 
against  any  other  shipper  of  oil  on  the  roads.  But 
the  matter  of  the  amount  of  freight  paid  by  the 
"  Standard  Oil  Trust "  to  the  roads,  so  far  as  the  in- 
terests of  the  "  Trust "  are  concerned,  is  in  itself  only 
of  secondary  consequence.  It  is  a  fact,  but  not  the 
pregnant  fact.  It  is  only  one  of  the  means  to  an  in- 
direct and  very  much  larger  end.  That  which  is  of 
the  greatest  importance  to  the  "  Standard  Oil  Trust " 
is  the  possession  of  the  power  which  comes  from  be- 
ing the  exclusive  shipper  of  petroleum  over  a  road, 
and  thereby  the  exclusive  furnisher  of  this  petro- 
leum to  large  areas  of  country.  This  power  enables 
the  "  Trust "  to  distribute  its  oil  to  consumers  at  a 
price  not  regulated  by  market  value, — a  price  which 
has  no  relation  to  cost  of  carriage  or  reasonable 
profit,  but  such  a  price  as  it  can  exact  from  consu- 


172  INDUSTRIAL   LIBERTY 

iners  iii  tlie  absence  of  all  competition.  The  reve- 
nues derived  from  this  source,  when  skilfully 
emplo}^ed,  are  immense  as  compared  to  any  sums 
which  might  come  from  simple  freight  discrimina- 
tions. The}^  afford  ample  funds  for  enabling  the 
"  Trust "  to  persuade  the  managers  of  the  railways  to 
confer  exclusive  right  of  way  over  the  roads  to  the 
"Trust,"  independent  of  any  question  of  freight 
rates.  In  reference  to  the  particular  case  of  Rice 
against  these  railways,  Just  cited,  it  is  not  improb- 
able that  the  "  Standard  Oil  Trust,"  as  a  result  of  the 
finding  of  the  Commission,  will  purchase  Mr.  Rice's 
refining  interests.  The  "  Trust "  can  thereupon  pre- 
pare itself,  as  exclusive  shipper,  to  meet  the  next 
independent  or  competitive  shipper,  who  will  be  al- 
together likely  to  be  less  persistent  than  Mr.  Rice, 
by  some  new  secret  method  of  throttling.  Mani- 
festly the  evil  will  not  be  al^ated  by  this  finding  of 
the  Commission,  for  the  reason  that  the  real  cause  of 
that  evil  has  not  been  reached.  To  suppose  that 
the  managers  of  this  "  Trust "  would  give  up  their 
processes  as  a  consequence  of  the  finding,  is  to  as- 
sume that  they  would  abandon  without  necessity  all 
the  motives  which  they  have  for  being, — all  the 
reason  for  their  success. 

There  can  hardly  be  any  greater  mistake  than  to 
consider  this  organized  power  a  private  right,  but 
this  is  the  common  estimate  of  it.  If  a  corporation 
which  comes  in  contact  with  the  public  as  the  rail- 
ways do,  may  be  allied  with  a  "  trust  "  organized  for 


OBSTACLES  IN  THE   WAY  OF  REFORM  1/3 

keeping  secrets,  and  if  by  such  repository  the  railway 
managers  may  shield  their  contracts  from  judicial  in- 
vestigation, then  the  immunity  of  the  quasi-^vM\Q, 
corporation  from  exposure  is  fully  assured,  and  the 
right  of  the  private  citizen  coming  in  contact  with  it 
cannot  be  secured.  We  have  seen  how  a  league  of 
corporations,  bound  into  a  "  trust,"  has  reduced  an 
industrv  into  its  possession,  and,  by  secret  alliances 
with  the  managers  of  the  railways,  perpetuates  this 
possession. 

Such  result  is  largely  rendered  possible  by  permit- 
ting a  corporate  masking — an  assumption  of  that 
sacred  right  to  privacy  which  belongs  properly  only  to 
the  individual  citizen.  As  Mr.  Justice  Field  says : 
"  Of  all  rights  of  the  private  citizen,  few  are  of 
greater  importance.  .  .  .  than  the  exemption  of  his 
private  affairs  and  books  and  papers  from  the  inspec- 
tion and  scrutiny  of  others.  Without  the  enjoyment 
of  this  right  the  other  rights  lose  half  their  value." ' 
But  it  must  be  plain  that  this  right  can  only  be  well 
assured  and  guarded  when  the  corporation  counter- 
feit is  not  permitted  to  interfere  with  it. 

I  repeat,  therefore,  in  this  connection,  what  in 
substance  I  have  said  before  :  that  all  of  the  facts  are 
necessary  for  a  proper  determination  ;  that  the  court 
must  be  enabled  to  discover  the  indirect  and  con- 
cealed as  well  as  the  direct  and  public  contracts.  It 
must  be  armed  with  the  power  of  following  all  of 
the  parties  to  the  dereliction   in  ])er8onis  to  their 

'  "  Federal  Reporter,"  32,  p.  241. 


174  INDUSTRIAL  LIBERTY 

last  liidiug-places,  and  unearthing  those  unwholesome 
secrets  which  not  only  threaten,  but  continually  in- 
terfere AN'ith  the  e(j^ual  political  right  of  the  citizen. 
And  more  than  this,  there  must  exist  a  power  some- 
where which  can  not  only  examine  specific  cases  and 
treat  specific  injuries  as  they  are  brought  to  notice, 
but  one  ^vhich  Avill  exercise  a  constant  supervision 
over  the  actions  of  the  trustee,  and  exact  from  him 
an  accounting  of  his  stewardship  ;  for  no  govern- 
ment can  be  free  which  permits  the  invasion  of  indi- 
vidual rights,  no  matter  how  it  may  hold  the  invader 
responsible  for  specific  acts  after  the  invasion  is 
committed.  The  citizen  in  a  free  state  must  be  able 
to  feel  that  he  can  embark  in  industrial  enterprises 
without  meeting  all  about  liim  secret  conditions 
which  interrupt  that  right.  It  is  the  duty  of  the 
state  to  remove  obstacles  from  the  individual,  so  that 
he  may  begin  as  well  as  prosecute  his  industries 
freely.  There  must  be  a  power,  therefore,  which  of 
its  OAvn  motion  ^^■ill  remove  insidious  obstructions, 
and  not  delay  its  action  until  specific  mischiefs  are 
accomplished.  The  Inter-State  Commerce  Commis- 
sion does  not  exercise  this  power,  and  as  at  pres- 
ent constituted  it  cannot.  In  thus  noting  the  limits 
of  this  Commission  as  constituted,  I  do  not  mean 
in  the  least  to  undervalue  its  importance.  I  think 
there  is  plainly  to  be  noticed  an  instinctive  sense 
of  relief  all  over  the  country,  by  I'eason  of  the 
high  character  of  the  members  of  this  Commission 
and  of  the  efficient  work  which  it  has  accomplished. 


OBSTACLES  IN   THE    WAY   OF  REFORM  1 75 

This  accoiiiplisliment  marks  tlie  necessity  for  en- 
larging its  scope  and  placing  its  po^vers  upon  a 
l)i'oad,  fundamental,  and  unquestioned  basis.  The 
\eiy  fact  that  Congress  was  impressed  by  the 
magnitude  of  the  evils  to  stretch  a  point  of  con- 
struction in  order  to  create  the  Commission,  only 
exhibits  more  clearly  how  the  evils  of  corporate 
management  have  outgrown  due  public  restraint; 
how,  hitherto,  the  country  has  not  been  sufficiently 
apt,  as  Bacon  puts  it ,  "  in  devising  remedies  as 
fast  as  time  breedeth  mischief."  When  we  look 
at  the  powers  conferred  by  this  unique  piece  of 
legislation,  exceeding  as  those  powers  probably  do 
the  existing  constitutional  bounds,  it  must  be  con- 
ceded that  they  are  not  yet  sufficient  to  fulfil  all  of 
the  requirements  of  the  needed  reform ;  that  al- 
though they  are  beneficial  in  their  effect,  they  can 
only  be  regarded  as  tentative. 

Nor  can  we  confidently  look  to  the  corporate  in- 
terest for  the  inauguration  of  a  comprehensive 
reform.  I  think  it  must  be  admitted  that  those 
directly  allied  to  this  interest  were  for  a  long  time 
very  reluctant  to  recognize  that  there  was  such  a 
thing  as  a  railway  problem  in  which  the  individual 
had  any  political  right.  Any  suggestion  of  govern- 
mental interference  was  assumed  to  be  in  some  way 
an  invasion  of  a  vested  rio;ht.  These  allies  con- 
tinned  in  this  attitude  until  internecine  wars  of 
rates  induced  them  to  look  about  for  some  means  of 
relief  from  themselves ;  but  they  still  regard    the 


1/6  INDUSTRIAL   LIBERTY 

question  as  their  exclusive  affair,  aud  only  seek  that 
political  power  be  conferred  upon  them  to  enable 
them  to  adjust  their  differences.  The  abnormal 
growth  of  the  power  of  the  railway  interest  in  poli- 
tics has  been  stimulated  through  the  acquiescence 
in  this  assumption  by  the  public.  It  may  be  said 
generally  of  the  railway  manager  that  his  success 
and  his  accumulations  are  largely  due  to  violations 
of  sound  economic  principles,  or,  at  any  rate,  that 
these  successes  and  gains  result  from  a  system  which 
has  flourished  in  violation  of  those  principles.  The 
methods  of  management  have  been  popularly  judged 
by  their  money  success,  and  thus  judged  they  are 
not  only  praised,  but  suggest  imitation.  Public 
approval  of  this  kind  is  always  apt  to  awaken 
self-satisfaction  among  the  approved ;  and  thus 
neither  any  reason  from  within,  nor  any  persuasive 
influence  founded  upon  anal3^sis,  will  be  likely  to 
chano-e  the  current  of  the  manasrers'  views.  In 
other  words,  they  are  in  a  condition  Avhich  hardly 
conduces  to  meditative  self-examination. 

I  do  not  mean  to  say  that  this  state  of  opinion  and 
feeling  is  universal  among  railway  men.  There  are 
differences  of  opinion  ;  nor  do  I  think,  indeed,  that 
the  grosser  assumptions  of  the  railway  interest  are 
so  general  as  they  have  been.  One  of  the  best  rea- 
sons for  hope  in  the  transitional  character  of  rail- 
way management  is  the  fact  that  such  men  as  Mr. 
Albert  Fink  and  Mr.  Charles  Francis  Adams  have, 
within  the  past  few  years,  come  into  great  promi- 


OBSTACLES  IN  THE   WAY   OF  REFORM  177 

nence  in  the  field.  These  are  meu  of  recognized 
integrity  and  consummate  ability.  There  is  com- 
moDly,  and  very  justly  as  I  believe,  attributed  to 
thein  a  disposition  for  the  highest  candor  in  their 
attitude  toward  the  questions  involved.  Neverthe- 
less I  may  be  permitted  to  say  that  I  think  it  is  clear 
that  all  of  the  conditions  of  a  comprehensive  reform 
cannot  be  Justly  expected  to  be  suggested  or  cordi- 
ally supported,  even  by  them.  They  are  reluctant 
to  admit  that  there  is  any  thing  in  the  industrial 
corporate  structure  itself  which  contains  any  tenden- 
cies essentially  at  variance  with  republican  institu- 
tions. They  look  upon  it  as  a  vehicle  of  industry 
complete  in  itself,  capable  of  self-government  and 
self-restraint,  and  through  such  self-government  to 
be  made  harmonious  with  our  institutions, — a  some- 
thing which,  whilst  it  may  have  some  functional 
defects,  is  thus  not  only  capable  of,  but  entitled  to 
this  self-government.  It  is  their  environment  which 
prevents  their  seeing  the  necessity  of  reform  through 
limitations  of  their  own  power ;  for  it  is  an  invari- 
able quality  of  power,  and  especially  of  corporate 
poAver,  never  to  yield  of  itself.  Those  in  possession 
of  it  who  mean  to  be  just  and  fair  are  not  excep- 
tions to  the  rule.  So  far  from  yielding  on  this  ac- 
count, they  rather  tend  to  hold  it  the  more  firmly 
and  to  justify  their  holding  with  what  to  them  is 
a  profound  conviction,  that  they  will  employ  it  more 
beneficently  than  any  others.  This  tenacity  is  thus 
supported  by  a  sense  of  duty,  in  which  they  assume 


178  INDUSTRIAL   II BERT Y 

that,  if  tliey  were  to  reliiiquisli  the  power,  it  would 
be  apt  to  fall  into  the  possession  of  those  who  would 
not  employ  it  so  fairly.  This,  I  say,  is  the  inherent 
quality  of  all  power,  but  it  is  especially  character- 
istic of  corporate  power. 

The  A\ase  statesman,  on  the  other  hand,  who  views 
the  equal  individual  political  right  of  the  citizen  as 
the  first  condition  of  freedom,  will  see  in  this  corpo- 
rate structure  itself  a  constant  motive  of  private  in- 
terest, and  thereby  a  tendency  against  freedom.  lie 
^vill  infer  that  this  tendency  can  only  be  counter- 
acted by  preserving  a  strict  surveillance  over  the 
artificial  structure.  He  therefore  believes,  as  a 
postulate,  that  this  structure  must  be  recognized  as 
an  artifice  which  tends  to  antagonize  freedom. 
This  difference  of  opinion  between  the  two  I'ests 
upon  an  essential  difference  of  opinion  as  to  the  kind 
of  title  which  the  managers  of  the  corporation  have 
to  the  property,  and  in  their  franchise.  What  are 
these  differences  of  estimate  as  to  the  nature  of 
this  ownership  ?  AVith  the  shareholder  of  the  cor- 
poration whose  investment  is  in  property  for  profit, 
the  dominant  motive  is  the  using  of  the  power 
which  he  has  received  from  the  State  for  the  fur- 
therance of  his  investment.  To  him  the  franchise  is 
apt  to  seem  an  incidental  means  for  the  promotion 
of  his  investment.  The  chief  motive  of  the  State, 
on  the  other  hand,  is  the  securing  of  the  convenience 
of  its  citizens  under  an  equal  rule  of  service,  and  to 
this  the  private  interest  of  the  shareholder  is  entirely 


OBSTACLES  I.V    THE    WAY   OF  REFORM  1 79 

secondary  and  subordinate.  The  manager  of  an  in- 
dustrial franchise  is  more  apt  to  consider  the  fran- 
chise as  something  other  than  a  creature  of  the  State, 
and  the  management  of  the  property  as  if  it  were  a 
management  sucli  as  usually  belongs  to  private  own- 
ership. This  is  the  inherent  tendency  of  corporate 
management  in  its  attitude  toward  the  State.  Neither 
Mr.  Fink  nor  Mr.  Adams  is  by  any  means  free 
from  it.  Mr.  Fink  says,  in  his  argument  before  the 
Committee  on  Commerce  of  the  House  of  Representa- 
tives, in  January,  1880  : 

"  In  my  judgment,  the  only  measure  now  wanted  in 
order  to  give  permanency  to  the  operations  of  these  asso- 
ciations [the  cooperative,  or  what  is  sometimes  called  the 
pooling  system  of  the  railroad  companies]  is  to  recognize 
the  same  as  necessary  and  beneficial,  to  give  legal  force  to 
the  voluntary  agreements  that  may  be  made  between  its 
members,  with  the  view  of  carrying  out  the  objects  of  the 
association,  nameh',  the  establishment  and  maintenance 
of  reasonable  and  non-discriminating  transportation  tar- 
iffs; in  fact,  the  object  of  your  legislation.  If  Congress 
would  pass  a  law  to  this  effect,  I  would  consider  the  whole 
railroad  problem  in  this  country  settled,  and  settled  upon 
truly  American  principles.  It  would  allow  the  proprietors 
of  the  railroads  to  manage  their  own  affairs,  which  they 
are  much  better  able  to  do  than  it  could  be  done  under  a 
centralized  government," 

It  is  the  assumption  in  this  that  the  managers  of 
the  railways  are  the  proprietors  of  them,  and  that 
the  affairs  of  the  railways  are  their  own  affairs,  which 
characterizes  the  attitude  of  all  railway  men  tow^ard 


l8o  INDUSTRIAL   LIBERTY 

tLe  problem.  The  just  answer  to  it  would  seem  to 
be,  that  the  shareholders  of  the  I'ailways  are  not  and 
cannot  be  owners  of  them,  in  the  strict  use  of  the 
term  ownership.  They  cannot  own  a  franchise  em- 
powering them  to  take  private  property,  or  to  con- 
struct, maintain,  and  operate  a  public  highway. 
They  may  exercise  it  as  public  agents,  but  its  o^^ti- 
ership  remains  with  the  State  as  an  essential  j)art  of 
the  power  of  the  State  ;  and  it  is  this  ownership  that 
the  State  cannot  part  company  with.  So  far  as  the 
public  are  concerned,  this  is  a  far  more  important 
part  than  that  which  the  shareholders  have.  It  is 
indeed  something  which  it  is  not  in  the  power  of  the 
legislature  to  vest  in  those  shareholders  as  owners, 
because  it  contains  essential  rights  belonging  to  the 
citizen  by  virtue  of  the  fundamental  law.  These 
rights  to  the  citizen  consist  in  the  right  to  demand 
from  the  holders  of  this  public  franchise  a  uniform 
service ;  and  there  can  never  be  any  dealing  with  the 
corporate  power  in  any  way  that  involves  a  surrender 
or  a  compromise  of  the  unrestrained  control  of  that 
franchise  to  those  who  manage  it.  The  direct  mo- 
tive for  the  management  of  an  industrial  (/wasZ-pub- 
lic  franchise  by  those  to  whom  such  franchise  is 
given,  is  essentially  commercial  and  private.  ■  The 
corporation  to  which  the  franchise  is  committed  has 
a  motive  for  gain ;  and  the  motive  for  which  the  fran- 
chise was  given — public  equal  convenience — does 
not  of  itself,  and  cannot,  run  current  with  the  motive 
for  gain.     The  two  are  not  homogeneous.     They  will 


OBSTACLES  IN  THE   WAY  OF  REFORM  l8l 

not  of  themselves  run  in  parallel  lines,  and  they  can 
only  be  kept  there  l3y  constant  supervision  of  the 
power  which  created  the  franchise  ;  so  that  it  is  ab- 
solutely necessary  for  the  existence  of  freedom  that 
the  motive  for  private  gain  shall  be  subjected  to  the 
motive  of  public  right  by  the  constant  surveillance  of 
the  guardians  of  that  right. 

Ever  since  the  commercial  corporation  has  come 
into  prominence  in  this  country  we  have  been  en- 
deavoring to  find  some  plan  whereby  those  in  pos- 
session of  a  franchise,  moved  as  they  are  by  desire 
for  private  gain,  shall  be  permitted  to  exercise  more 
or  less  of  a  political  power  in  the  use  of  that  fran- 
chise. We  have  proceeded  upon  the  theory  that 
from  this  union,  in  some  way,  there  might  result 
such  self-imposed  restraint,  by  the  railway  manager, 
as  would  make  his  use  of  the  public  power  which 
the  franchise  conferred  equitable  and  Just.  The 
attempt  has  been  a  failure.  It  never  has  been  and 
never  can  be  successful,  for  it  involves  an  inherent 
contradiction.  To  estimate  the  inevitable  result  we 
have  but  to  consider  the  relative  force  and  tendency 
of  the  conflicting  motives  involved.  The  motive  of 
the  railway  manager  for  gain  is  direct,  constant,  per-- 
sistent;  it  is  increased  by  competition  and  stimu- 
lated by  the  hope  of  wealth.  The  motive  for  his 
performance  of  the  public  duty,  on  the  other  hand, 
if  the  requirement  of  the  performance  is  loosely 
guarded  by  the  state,  depends  almost  entirely  upon 
the  spontaneous  suppression,  by  the  railway  manager, 


1 82  INDUSTRIAL   LIBERTY 

of  liis  persistent  motive  for  gain.  Security  for  tlie 
public  riglit  thus  depends  upon  tlie  sense  of  patri- 
otism of  the  railway  manager, — a  sense  Avhich  when 
it  exists,  is  constantly  strained  by  those  severe  tests 
of  competition  Avhich  occur  between  the  rival  fran- 
chises and  a  sense  which,  if  persisted  in,  is  likely  to 
bring  commercial  failure  and  disgrace.  The  virtue 
of  self-restraint  will  not  flourish  in  any  system  of 
industry  ^vhere  avarice  is  made  the  goal.  Nor  can 
commercial  justice  be  expected  to  prevail  in  any 
condition  where  the  only  final  reward  of  that  justice 
is  bankru|)tcy. 

The  name  of  Mr.  Adams  has  been  even  more 
prominently  associated  with  the  railway  problem 
than  that  of  Mr.  Fink.  He  has  wi'itten  upon  it  to  a 
considerable  extent,  and  described  with  great  power, 
and  in  detail,  many  of  its  evils.  His  utterances  have 
been  received  with  great  consideration,  partly  be- 
cause of  his  antecedents,  and  because  his  name  is 
regarded  as  a  synonym  for  honest  purposes.  Mr. 
Adams'  faith  in  the  autonomy  of  the  corporation  is 
no  less  marked  than  that  of  Mr.  Fink.  Indeed,  it  is 
so  great  that  he  not  only  raises  no  question  as  to  the 
inherent  vices  of  the  corporate  structure,  but  he  as- 
sumes the  whole  cause  of  all  the  evils  of  railway 
management  to  be  outside  of  that  structure.  Before 
the  Inter-State  Commerce  Committee  he  made  an 
argument  mainly  against  all  restrictive  and  repress- 
ive legislation,  and  in  favor  of  enabling  legislation 
for  the  corporation.     While  it  is  true  that  by  means 


OBSTACLES  IN    THE   WAY  OF  REFORM  1 83 

of  siicli  euablino-  leo-islatiou  he  assumed  tliat  the  cor- 
poratiou  would  regulate  itself  in  the  direction  of 
reform,  his  argument  did  not  show  that  he  perceived 
anything  in  the  corporation  itself  which  ^vould  tend 
to  conflict  with  the  progress  of  reform.  AVith  un- 
bounded faith  he  set  forth  what  he  assumes  to  be 
the  cause  of  all  existing  railway  evils,  saying  at  the 
outset :  "  What  then  is  this  mysterious  underlying 
cause  of  which  the  railroad  abuses  I  have  referred 
to  as  so  notorious  are  the  outward  manifestations  ? — 
with  all  possil)le  confidence  I  assert  that  it  is  excess- 
ive and  unregulated  railroad  competition.  This,  and 
nothing  else."  '  One  can  scarcely  conceive  of  a  more 
sisrnal  instance  of  mistakins;  the  result  for  the  cause. 
]Mr.  Adams  took  this  as  the  postulate  for  his  argu- 
ment before  a  Concessional  committee  in  1880.  In 
1885,  as  a  witness  before  the  Senate  Select  Commit- 
tee on  Inter-State  Commerce,  he  tells  the  Committee 
that  there  is  nothino-  which  has  occurred  in  the 
meantime  to  induce  him  to  change  his  views ;  that, 
on  the  contrar}^,  he  has  become  more  and  more 
convinced  of  their  soundness.  The  confidence  which 
is  thus  based  upon  what  is  assumed  to  be  the  real 
cause  of  the  evil,  of  necessity,  if  that  assumption  be 
false,  limits  the  value  of  any  suggestions  for  re- 
form which  proceed  from  such  a  premise.  AVhere 
one  assumes  the  evident  effect  of  an  evil  to 
be  its  cause,  his   remedial   suggestions  cannot  pos- 

'Argument  of  Charles  Francis  Adams,  Jr.,  before  the  Inter-State  Com- 
merce Committee  of  the  House  of  Representatives,  February  27,  18S0. 


1 84  INDUSTRIAL   LIBERTY 

sibly  be  comj)lete.  If  the  City  Council  of  the 
city  of  New  York  were  to  turn  loose  uj^on  Broad- 
^^'ay  a  number  of  wild  beasts,  there  would  undoubt- 
edly follow  active  competition  among  those  beasts 
for  devouring  men,  women,  and  children.  But  this 
comjDetition  could  in  no  sense  be  called  the  primal 
cause  of  the  evil.  The  primal  cause  would  be  the 
letting  loose  of  the  beasts  upon  the  community.  In 
the  same  manner,  the  underlying  cause  of  the  railway 
evil  is  the  license  with  which  the  State  has  endowed 
railway  corporations  bent  upon  unrestrained  aggres- 
sion. It  is  a  natural  result  that  in  the  eagerness  of 
these  to  employ  their  opportunities  they  have  fallen 
into  unrestrained  competition.  In  Mr.  Adams'  confi- 
dent opinion,  therefore,  it  is  not  that  political  sole- 
cism— the  artificial  structure,^ — but  resultants  of  this 
solecism,  which  constitutes  the  cause  of  the  evil.  The 
fact  that  the  State  has  carelessl}'"^given  to  these  cor- 
porations the  license  by  which  they  have  made 
themselves  warriors  for  conquest  is  a  fact  which  lies 
beyond  the  line  of  Mr.  Adams'  inquiry.  In  the 
eagerness  of  the  railway  powers  for  supremacy,  they 
saw  at  last  their  tendency  to  self-destruction.  The 
aid  which  they  thereupon  sought  would  not  admit  of 
control  from  without.  They  sought  additional  power 
from  their  creator,  the  State,  to  organize  themselves 
for  a  more  efficient  continuance  of  their  courses ;  and 
the  remedy  which  Mr.  Adams  suggests  is  nothing- 
other  than  the  furtherance  of  this  method.  Practi- 
cally it  is  no  less  than  the  imparting  to  an  organ- 


OBSTACLES  IN  THE   WAY  OF  REFORM  1 85 

ized  evil  a  more  tliorougli  organization.  The  illogi- 
cal hope  which  Mr.  Adams  entertains,  that  such  a 
course  would  woi-k  a  modification  of  the  evil,  does 
not  affect  its  tendencies ;  for  his  remedial  theory  pro- 
ceeds upon  the  assumption  not  only  of  continuing 
the  cause,  but  of  conferring  upon  it  the  power  of 
self-continuance. 

In  accordance  mth  this  theory,  he  rests  with  great 
faitli  upon  what  he  calls  the  "  survival  of  the  fittest." ' 
It  is  doubtful  whether  any  phrase  invented  to  ex- 
press a  clear  scientific  fact  has  ever  been  more  gener- 
ally ^\Tested  than  this,  fl'om  its  legitimate  meaning  in 
suppoit  of  false  reasoning.  It  has  been  seized  upon 
by  those  who  have  worn  out  the  misapplied  uses  of 
the  laissez  faire,  in  order  to  sustain  the  fallacy  that 
"  whatever  is,  is  right."  Mr.  Adams'  employment 
of  this  phrase  is  a  fitting  illustration  of  its  wrong 
use.  Under  this  reasoning,  the  evils  arising  from 
careless  legislation,  by  which  the  artificial  structures 
created  by  such  legislation  are  loosely  restrained, 
come  to  be  regarded  as  something  which  ought  to 
be  unmolested.  Those  who  treat  evolution  in  this 
way  seem  to  regard  artificial  forces  as  something 
which  may  control  human  intelligence.  They  treat 
society  as  something  which  may  submit  itself  to 
any  legislative  creation,  and,  because  it  is  a  legisla- 
tive creation,  insist  that  it  must  prevail.  They  ig- 
nore the  larger  fact  that  those  forces  which  mark 

'  Report  of  U.  S.  Senate  Select  Committee  on  Inter-State  Commerce, 
1886,  p.  1204.     Testimony  of  C.  F.  Adams,  Jr. 


1 86  INDUSTRIAL  LIBERTY 

progressive  civilization  consist  in  the  power  and  dis- 
position of  man  to  modify  artifices  and  bring  tliem 
under  tlie  rule  of  natural  la^^' ;  and  that  tlie  most 
reasonable  hope  for  this  civilization  rests  upon  the 
belief  that  man  may  at  length  solve  the  problem 
of  liberty  by  arresting  and  preventing  those  political 
disasters  ^vhich  come  from  artificial  interference.  It 
is  thus,  by  the  examination  of  organic  methods, 
that  mankind  becomes  enabled  to  disci'iminate  be- 
tween those  things  which  are  dominant  in  nature's 
law  and  those  which  may  be  modified.  The  great- 
est exercise  of  human  intelligence,  therefore,  is  to 
apply  principles  to  institutions.  This  is  what  I 
understand  to  be  the  true  import  of  evolution,  the 
meaning  of  the  "  survival  of  the  fittest "  as  applied 
to  political  science.  In  this  view  it  seems  to  me, 
nothing  can  be  more  delusive  and  misleading  than 
to  undertake  to  apply  this  "  survival  of  the  fittest " 
to  the  incidental  and  artificial  development  about  us. 
However  difiicult  the  details  of  adapting  corporate 
methods  to  natural  law  may  seem  to  be,  at  Avhatever 
seeming  sacrifice  of  convenience,  republican  freedom 
requires  that  it  must  be  done.  The  seeming  difii- 
culties  are  seized  upon  as  pretexts  for  pi-ev  ailing 
methods.  When  we  are  met,  for  instance,  with  the 
proposition,  from  the  railway  manager,  that  the 
demands  of  commerce  require  that  the  railways 
shall  do  their  carrying,  on  competitive  terms  to  com- 
mon points  ;  "  that  it  ^vas  never  intended  by  nature 
that  some   obscure  point   in  the  Rocky  Mountains 


OBSTACLES  IN  THE    WAY   OF  REFORM  18/ 

should  be  l)uilt  up  at  the  expense  of  large  seaboard 
cities,"  we  need  to  analyze  the  proposition ;  and  so 
analyzing  it,  we  find  that  artificial  are  substituted 
for  natural  conditions,  and  the  proposition  might  be 
more  correctly  stated,  that  it  cannot  be  made  con- 
sistent with  natural  law  or  political  economy  that  a 
common  carrier  should  convey  a  barrel  of  flour  from 
San  Francisco  to  New  York  for  less  than  the  cost  of 
carriage,  and  then  recoup  that  loss  from  some  unpro- 
tected, unguarded  local  point  along  the  line  of  the 
railway  ;  that  nature  never  intended  that  huge  cor- 
porate powers  should  be  allowed  to  distribute  advan- 
tages and  disadvantages  in  accordance  with  the  sense 
of  greed  of  their  managers  in  order  to  promote  secret 
and  personal  interests ;  that  no  pretence  of  convenience 
to  commerce  can  justify  this.  Moreover,  that  geog- 
raphical distances  and  water-routes  have  been  made 
by  natural  causes ;  that  railways  are  creatures  of 
man's  creation;  that  the  corporations  by  which 
these  are  conducted  are  like  creations,  and  that 
in  the  progress  of  natural  law  these  structures,  in 
order  to  work  normally,  must  be  made  to  adapt 
themselves  to  natural  laws,  and  therefore  to  sound 
political  conditions,  and  that  this  in  a  republic  means 
the  adaptation  of  them  to  equal  political  liberty.  If 
the  processes  of  this  adaptation  are  at  times  diffi- 
cult and  intricate,  they  are  not  on  that  account  the 
less  necessary,  and  they  cannot  be  avoided  by  any 
shift  or  evasion  where  political  right  is  to  be  pre- 
served. 


l88  INDUSTRIAL  LIBERTY 

That  survival  wbicli  sliould  besought  for  is  there- 
fore of  the  ultimate  fittest — that  which  is  physically, 
morally,  and  politically  the  fittest.  Intelligence  has  a 
large  work  in  this  field,  in  seeking  to  discern  primal 
causes  and  ultimate  effects,  and  in  seeking  to  adapt 
political  and  industrial  conditions  to  political  and 
industrial  principles.  AVhen  we  find  about  us 
corporations  which  misdirect  human  energy  and 
interfere  with  human  rights,  we  have  to  consider  not 
only  whether  these  promote  temporary  industry,  but 
whether  their  management  is  in  accordance  Avith 
natural  laws,  with  industrial  economy,  and  Avith 
human  liberty  ;  whether,  in  a  word,  they  fall  in 
accord  with  the  essential  principles  of  civilization. 

Mr.  Adams  is  of  the  opinion  that  the  power  for 
organization  in  the  American  people  is  very  great — 
greater  even  than  was  that  of  the  Romans.  This  is 
in  all  probability  true.  Still  it  is  possible  that  such 
a  power  may  be  exercised  without  due  guards.  I 
think  it  is  a  present  fact  that  it  has  transcended 
these  guards,  and,  to  a  considerable  extent,  the 
authority  of  the  government.  It  is  this  excessive 
power  of  oiganization  that  Mr.  Adams  would  call 
into  larger  growth  by  what  he  calls  the  "  encourage- 
ment of  the  federation  of  the  railroad  management," 
— a  j^roposition  which  springs  either  from  too  great 
a  solicitude  for  a  continuance  of  the  railroad  poAver, 
through  a  more  formal  and  permanent  recognition,  or 
else  from  a  somewhat  in2:enuous  confidence  in  the 
self-abnegation  of   a   power   whose    most    obvious 


OBSTACLES  IiV  THE   JVA  Y  OE  REEORM  1 89 

motiv^es  are  for  private  gain.  But  all  luiiiian  ex- 
perience shows  that  no  artificial  organization,  whose 
motive  is  private  gain,  can  safely  be  endowed 
with  political  influence  or  regulation  of  industry, 
except  under  continuous  and  specific  governmental 
restraints.  No  matter  what  beneficent  intention 
Mr.  Adams  may  have  for  such  design  it  ^vill  be 
beyond  any  human  reach  to  change  the  inherent 
qualities  of  a  corporate  federation.  Such  a  federa- 
tion in  this  country  would  constitute  a  federation 
of  commercial  monarchies  within  a  federation  of 
political  republics.  There  would  thus  be  two  fed- 
erations Avith  motives  diametrically  opposite — one 
containing  a  centripetal,  the  other  a  centrifugal 
force.  The  two  do  not  act  in  the  same  direction. 
One  or  the  other  of  these  must  predominate.  Such 
a  gift  of  federation,  in  a  republican  country,  could  be 
no  other  than  a  Trojan  gift. 

In  regard  to  Mr.  Adams'  personal  relations  to 
the  railway  management  and  his  duties  to  it,  I 
do  not  presume  to  say  that  it  becomes  necessary 
for  him  to  divest  himself  of  interest  in  order  to 
discuss  the  railway  problem.  But  it  is  obvious  that 
during  the  continuance  of  such  relation  he  cannot 
maintain  such  a  judicial  attitude  toward  the  question 
of  reform  as  will  enable  him  to  deal  rightly  wdth  its 
larger  phases,  and  the  intrinsic  value  of  his  sug- 
gestions, therefore,  as  a  reformei",  is  necessarily  lim- 
ited by  his  interest.  This  does  not,  of  course,  in- 
volve any  question  of  his  ability  or  his  integrity ;  it 


IQO  INDUSTRIAL  LIBERTY 

solely  indicates  tlie  point  of  view  from  wLicli  lie  sees 
tiie  corporation,  a  point  of  view  from  witliiu  out- 
ward ;  a  point  from  wliicli  it  is  impossible  to  see  the 
whole  of  it.  No  man,  whatever  his  ability  or  hon- 
esty, ^vho  permits  the  line  of  his  personal  interest  to 
cross  the  path  of  his  investigations,  can  take  a  thor- 
oughly passionless  view  of  all  that  is  involved  in 
those  investigations.  Were  Mr.  Adams  to  divest 
himself  of  all  direct  interest,  I  do  not  believe  there  is 
any  one  who  would  be  better  equipped  for  the  task 
of  reform. 

When  he  took  the  presidency  of  the  Union  Pacific 
Railway  there  were  many  who  believed  that  road 
to  be  beyond  redemption  by  honest  methods.  It  had 
previously  received,  from  time  to  time,  from  Con- 
gress enormous  concessions  of  subsidies  and  credits. 
By  the  unchallenged  use  of  the  corporation,  the  man- 
agers and  manipulators  watered  the  stock,  placed 
parasites  upon  the  road,  ignored  all  j)ublic  and  pri- 
vate rights,  and,  having  diverted  all  of  the  revenues 
that  they  could  out  of  the  corporation  and  into 
their  individual  ownership,  they  turned  it  over  to  the 
stockholders,  whom  Mr.  Adams  represented.  Its  af- 
fairs took  their  necessary  course  until  the  gravity  of 
the  evil  arrested  the  public  attention.  When  the 
details  of  that  evil  had  penetrated  the  public  mind 
the  gravity  of  the  general  railway  problem  became 
apparent.  Then  it  came  to  be  assumed  that  this 
railway  was  beyond  the  hope  of  immediate  reform, 
and  that  the  evils  of  its  management  could  only  be 


OBSTACLES  IN    THE  WAY  OF  REFORM  I9I 

corrected  tlirougii  reform  of  the  whole  railway 
system.  Whether  or  not  this  view  of  the  case  is  en- 
tirely correct,  there  certainly  is  enough  in  it  to  war- 
rant the  assertion  that  the  president  of  the  road, 
having  taken  it  with  the  obligations  ^vhich  that 
charge  involved,  cannot  be  expected  to  contemplate  or 
suggest  a  reform  ^vhich  involves  the  complete  sub- 
ordination of  his  authority.  Taking  Mr,  Fink  and 
Mr.  Adams,  then,  as  the  best  representatives  of  the 
railway  interest,  I  think  it  may  fairly  be  said  that 
whatever  the  public  may  hope  from  the  railroads  in 
furnishing  data  or  assistance  toward  general  reform, 
it  cannot  reasonably  be  supposed  that  there  will  be 
in  that  quarter  an  anxiety  to  establish  those  more 
fundamental  principles  which  essentially  limit  the 
power  of  the  corporation.  ^ 

Xor  can  we  look  to  the  statesmen  who  have  either 
direct  or  indirect  alliances  with  the  railway  interest, 
for  any  aid  or  suggestions  toward  a  reform  founded 
upon  thorough  analysis.  Their  corporate  inter- 
ests stand  in  perpetual  conflict  with  their  duties 
as  representatives  of  the  people.  These  interests 
are  always  likely  to  be  nearer  and  more  personal  to 
them.  The  growing  need,  therefore,  for  legislation 
to  guard  the  political  and  individual  right  against 
the  corporate  power  is  more  likely  to  suggest  to 
them  evasion  than  examination.  Some  of  these  rep- 
resentatives have  been  placed  in  their  seats  through 
the  direct  influence  of  the  corporate  power  for 
the  purpose  of  furthering  it,  by  legislation.     Hav- 


192  INDUSTRIAL   LIBERTY 

ing  been  successfully  engaged  in  supplanting  eco- 
nomic and  natural  laws  by  processes  which  seem 
to  them  of  a  more  practical  kind,  it  is  not  to  be  sup- 
posed that  such  representatives  will  examine  the 
force  of  those  economic  laws  with  which  they  stand 
in  conflict.  Besides  this,  they  possess  to  a  consider- 
able extent  the  public  approval  of  their  success, 
and  their  tendency,  therefore,  is  to  accept  this  ap- 
proval as  a  vindication  of  their  methods ;  and  thus 
these  methods  to  them  easily  fall  in  the  category  of 
political  virtues.  The  I'ailway  statesman  assumes  to 
be,  and  to  some  extent  is,  regarded  as  the  representa- 
tive practical  man.  He  looks  upon  the  economist  as  a 
theorist,  and  classes  the  study  of  all  political  prin- 
ciple as  theory.  His  natural  course  of  reasoning 
suggests  to  him  the  conclusion  that  whilst  we  were 
livino;  in  more  active  recoo-nition  of  Avhat  we  call 
economic  principles,  we  had  no  such  development  of 
material  and  physical  resources  as  we  now  have,  nor 
anything  comparable  to  it ;  that  our  progress  has 
been  brouo;ht  about  throu2:h  what  economists  call  a 
contradiction  of  economic  la^vs,  and  therefore  it  must 
be  that  those  laws  which  were  formerly  depended 
upon  are  no  longer  in  force.  When  a  man  has 
achieved  political  success,  and  becomes  a  United 
States  senator  solely  because  he  has  achieved  prior 
success  in  railway  management,  we  need  not  look 
to  that  man  for  such  legislative  or  judicial  wisdom 
as  comes  from  the  examination  of  political  and  eco- 
nomic principles.     The  prevalence  of  such  principles 


OBSTACLES  IN  THE   WAY  OF  REFORM  1 93 

ill  liis  State  would  have  made  his  success  impos- 
sible. Nor  can  we  conceive  tliat  a  man  wlio  has 
learned  his  lesson  from  the  corporation  "will  feel  in 
any  constitutional  sense  that  he  is  the  servant  of  the 
people.  His  energies  have  been  spent  and  his  suc- 
cess acquired  in  undermining  the  sanctions  of  politi- 
cal right,  and  in  employing  for  his  personal  gain 
rights  which  belong  legitimately  to  the  citizen. 
His  influence,  therefore,  in  legislation  will  be  found 
to  be  of  that  kind  which  promotes  class-interest  to 
the  detriment  of  individual  right,  which  converts 
the  delegated  servant,  chosen  by  the  people,  into 
an  ally  of  a  corporation  for  usurping  public  power 
in  order  to  emplo}^  this  power  against  the  common 
right,  in  absorbing  the  proceeds  of  subsidies,  and  the 
guaranties  of  government  credit.  When,  therefore,  a 
senator  urges  that  the  railway  question  be  left  with 
those  in  corporate  control,  in  order  that  they  may  work 
out  their  problems  unmolested  by  the  government,  it  is 
not  possible  that  he  can  realize  his  relation  as  a  repre- 
sentative of  the  people  of  his  State  to  support  a  free 
government ;  and  when  another  senator  resists  inves- 
ligation  into  corporate  methods  in  which  he  is  di- 
rectly interested,  it  is  not  possible  that  he  can  realize 
either  the  true  interests  of  his  constituents  or  the 
constitutional  obligations  under  which  he  holds  his 
seat. 

Nor  again  can  we  expect  any  assistance  in  reform 
from  the  corporation  attorneys.  By  these  I  particu- 
larly mean  that  large  number  of  attorneys  who  are 


194  INDUSTRIAL  LIBERTY 

employed  at  large  salaries  to  give  their  exclusive 
services  to  tliis  interest.  Tliey  naturally  seek  for 
authority  in  form.  All  their  suggestions  lie  in  this 
direction.  Their  services  are  devoted  to  the  pro- 
motion of  existing  corporate  methods.  Their  effi- 
ciency is  measured  by  the  corjDorate  managers  largely 
by  their  power  to  resist  reform.  The  corporate  in- 
terest, satisfied  A\dth  its  established  policy,  desires 
only  to  fortify  that  policy,  to  keep  it  within  the  forms 
of  law.  Tlie  whole  office  of  the  corporation  attorney 
is  thus  exerted  to  give  strength  and  system  to  an 
artificial  structure,  with  no  thought  of  bringing  in- 
dustrial processes  within  the  principles  of  equal 
political  and  industrial  right.  In  furtherance  of  this 
we  find  him  ready  with  his  constructions  solely  to 
this  end;  ready  to  insist  that  a  corporation  is 
either  public  or  private  as  suits  the  interest  of 
the  corporation;  to  assume  it  to  be  public  as  being 
the  possessor  of  the  right  of  eminent  domain,  and 
private  when  it  is  assumed  that  its  charter  is  an  in- 
violable contract  with  the  State.  The  corporation 
attorney  is  constant  in  insisting  upon  strict  adher- 
ence to  the  Common  Law  wherever  the  Connnon 
Law  is  inadequate  for  the  relief  of  an  abuse  ;  for  he 
is  always  a  strict  constructionist.  He  will  question 
the  constitutiouality  of  any  commission  or  court 
which  is  erected  for  instituting  special  inquiries  into 
corporate  methods  or  latent  frauds,  unless  such  com- 
mission or  court  may  be  in  some  way  made  to  serve  his 
ends.     A  considerable  part  of  the  best  legal  talent 


OBSTACLES  IN  THE    WAY  OF  REFORM  IQS 

of  tlie  country  is  arrayed  on  tlie  corporate  staff  and 
engaged  in  this  endeavor.  And  as  nothing  is  more 
natnral  to  them  than  to  suggest  difficulties  in  the  way 
of  changes  of  form,  the  earnest  reformer  is  placed 
at  m-eat  disadvantao-e  by  seemiuir  to  be  an  innovator 
ii])on  what  are  called  the  sanctions  of  form.  It  is 
this  that  largely  fortifies  abuses  against  liberty  and 
makes  them  so  difficult  of  removal.  It  was  thus  that 
slavery,  upheld  by  the  Constitution,  and  by  the  de- 
cisions of  the  Supreme  Court,  gave  to  its  defenders 
the  advantao-e  of  beino;  law-abidins;  citizens,  and  to 
those  who  attacked  it  the  great  disadvantage  of 
being  innovators  Avho  Avere  seeking  to  overthrow 
that  which  the  Constitution  and  judicial  decision 
had  recognized  and  protected. 


CHAPTER  VII 

OBSTACLES    IN    THE    WAY    OF    REFORM CONCLUDED 

Another  of  the  obstacles  to  reform  consists  in  the 
organized  character  of  the  evils  to  be  reached. 
Through  the  support,  direct  and  indirect,  of  what  is 
called  the  vested  interest,  these  evils  have  ac- 
(piired  great  cohesion  ;  for  nothing  is  more  persist- 
ently conservative  of  existing  structures  than  this 
interest.  The  honest  investors  of  actual  capital  in 
the  bonds  and  stock  of  corporations,  where  the  in- 
vestment is  not  accompanied  by  management  or 
control,  especially  show  such  persistency.  It  has 
grown  to  be  the  case  "within  the  past  forty  years  that 
a  considerable  part  of  the  investments  made  in  cor- 
porate enterprises  are  thus  disassociated  from  con- 
trol, and  as  these  investors  take  no  part  in  the  direct 
management  of  the  corporation,  they  therefore  gen- 
erally have  but  a  dim  perception  that  they  are  the 
supporters  and  encouragers  of  evil  methods.  They  do 
not  often  hold  themselves  responsible,  either  directly 
or  remotely,  for  the  wrongs  of  management,  because 
they  do  not  come  into  direct  contact  with  that  man- 
agement, except  here  and  there  in  the  indefinite  and 
perfunctory  way  of  voting  ready-made  tickets  in  the 

196 


OBSTACLES  IN  THE   WAY  OF  REFORM  19/ 

elections  for  officers.  Of  tliis  class  it  may  be  said  that 
whilst  they  constitute  one  of  the  most  efficient  sup- 
ports of  civilization,  they  are  at  the  same  time  among 
the  strongest  supporters  of  the  organized  wrongs. 
The  men  who  get,  gather,  hold,  and  bequeath  prop- 
erty are  naturally  the  conservators  of  the  fruits  of 
industry ;  but  from  the  very  biases  which  they  acquire 
in  the  getting  and  holding  of  these  fruits,  they  lose 
the  disposition  to  investigate  the  structure  of  the  in- 
stitutions, and  thus  by  habit  and  character  are  rather 
preservers  of  what  is,  than  promoters  of  what  ought 
to  be.  In  this  attitude  towards  property,  they  are 
naturally  jealous  of  the  forms  ^^'hich  guard  their 
holdings,  and  the  sum  of  their  inspection  is  the 
audit  of  accounts.  This  is  to  deal  only  w^ith  the 
dollars  and  cents  of  their  investments,  and  to  leave 
all  untouched  the  principles  of  political  right  ^^'hich 
lie  behind  these  audits. 

There  is  often,  indeed,  a  certain  cowardice  about 
the  possessors  of  these  interests  which  makes  them 
dread  examination.  While,  in  reasoning  among 
themselves  in  private  conversation,  they  may  be 
ready  enough  to  condemn  the  apparent  wrongs  of 
corporate  management  in  a  general  way ;  yet 
when  remedies  are  suggested  which  tend  to  dis- 
turb the  tranquillity  of  the  existing  conditions,  or 
■when  such  incidental  outbreaks  as  riots,  labor  diffi- 
culties, or  strikes  arise,  they  perceive  in  these  no 
other  cause  than  the  viciousness  of  human  nature 
exhibited  in  the  wanton  disposition  to  disturb  their 


1 98  INDUSTRIAL   LIBERTY 

riglits.  Tliev  iufer  from  sucli  disturbances  notliin<2: 
to  indicate  to  them  any  individual  responsibility  on 
their  part.  Witli  many  of  them,  it  must  be  confessed, 
too,  that  this  dread  of  disturbance  tends  to  blind 
them  to  the  illicit  means  by  "which  the  ac(]^uisitions 
were  made,  or,  when  these  means  become  too  ob- 
vious to  be  ignored,  often  induces  them  to  condone 
them.  They  more  easily  effect  this  compromise 
\nth  their  consciences  by  thinking  to  avoid  respon- 
sibility for  the  wrong  because  they  are  not  directly 
connected  with  it,  and  so,  claiming  to  represent  the 
moral  standard  of  the  community,  come  to  make 
the  moral  interest  the  supporter  of  the  wrong. 
Under  these  circumstances,  it  is  obvious  that  it  re- 
quires the  severest  logic  of  facts  to  bring  the  holders 
of  these  interests  to  a  consciousness  of  the  evils 
which  they  are  supporting. 

Numerous  revolutions  in  history  have  resulted 
from  the  tenacity  of  this  interest  in  the  support 
of  organized  evils.  One  historic  example  is  afforded 
by  its  blind  tenacity  just  preceding  the  Revolu- 
tion in  France.  When  the  owners  of  property 
become  impressed  with  the  notion  that  the  invest- 
ment is  paramount,  and  can  see  in  reform  nothing 
but  a  vicious  attack  upon  right,  they  stand  im- 
movable. But  behind  all  investment  of  the  fruits  of 
industry  there  lies  the  ultimate  political  right.  This, 
repressed  to  the  intolerable  point,  inevitably  pro- 
duces re\'olution.  The  vested  interest,  therefore, 
cannot  be  counted  upon  for  organic  reform.    Its  pos- 


OBSTACLES  IN  THE    WAY   OF  REFORM  1 99 

sessors  cannot  be  expected  of  tliemselves  to  under- 
take to  study  its  conditions.  From  the  inherent 
character  of  that  interest  its  owners  are  possessed 
by  a  sort  of  moral  daltonism  which  renders  them 
oblivious  to  those  conditions  wliich  precede  and 
which  make  political  revolutions  inevital)le. 

Besides  this,  a  more  indefinite  responsibility  for  ex- 
isting evils  is  to  be  found  in  the  factor  which  we  call 
public  opinion.  In  the  broad  sense  there  are  only 
two  general  modes  of  creating  political  conditions. 
One  of  these  is  by  studying  primal  principles  and 
rigorously  establishing  precedent  conditions  in  ac- 
cordance with  such  principles ;  and  thus  making  a 
political  foundation  which,  if  wholesome,  tends  to 
prevent  the  growth  of  political  evils.  The  other  is 
by  letting  things  drift  until  evils  grow^  perceptible 
and  oppressive,  and  then  dealing  with  them  in  detail. 
The  former  method  rests  political  right  upon  a  funda- 
mental constitution ;  the  latter  has  no  such  founda- 
tion and  deals  only  with  consequences.  It  is  what 
Carlyle  calls  "  building  your  house  from  the  top 
do^\Tiward."  Unfortunately  for  mankind,  the  latter 
is  the  mode  which  prevails,  and  whatever  progress 
has  been  made  in  civilization  has  hitherto  mainly 
depended  upon  this  kind  of  patching.  This  is  not 
altoo-ether  flatterino*  to  human  intellisjence,  but  it  is 
the  mode  whicli  prevails. 

In  searching  for  the  contributing  causes  of  politi- 
cal evils,  we  may  often  find  some  of  them  to  be  in  a 
measure  the  resultants  of  public  opinion.     In  a  dis- 


200  INDUSTRIAL   LIBERTY 

tribution  of  responsibilities,  therefore,  the  more 
prominent  actors  in  the  evils  are  not  solely  to  be 
held  accountable,  for  in  one  sense  they  are  to  a  con- 
siderable degree  but  the  products  of  this  o})inion, 
and  we  must  conclude  that  one  of  the  deterrents  to 
reform  is  the  fact  that  the  public,  through  their  im- 
perfect perception  of  the  evils  to  be  reformed,  have 
contributed  a  share  towards  stimulatinoj  those  evils. 
The  motives  of  the  chief  industrial  actors  are  not  to 
be  gauged  entirely  by  their  actions,  but  partly  by 
their  surroundings — by  the  standard  which  is  made 
for  them  by  the  public.  Thus  considering  all  of  the 
constituents  of  corporate  aggression,  especially  those 
w^hich  have  been  incident  to  railway  construction  and 
management,  it  is  proper  to  designate  the  part  which 
the  public  have  taken  in  these. 

The  public  have  stimulated  building  in  its  earlier 
stages,  and  have  given  many  marks  of  approval 
to  its  earlier  accomplishment.  We  all  kno\v  how 
public  clamor  has  urged  forward  rapid  railway  con- 
struction irrespective  of  the  character  of  the  man- 
agement or  the  means  employed.  The  popular  vote 
has  been  rather  eager  to  give  the  credit,  first,  of  the 
tovsmships,  then  of  the  cities,  then  of  the  States,  and 
at  last  of  the  nation.  The  public  have  demanded  not 
only  that  the  railways  be  built,  no  matter  how,  but 
have  largely  ignoi-ed  all  attempts  at  criticism.  They 
have  even  gone  so  far  as  to  treat  the  occasional  indi- 
vidual persistent  censor  as  an  obstacle  to  industrial 
progress.    A  large  proportion  of  railway  construction 


OBSTACLES  IN  THE    WAY  OF  REFORM  20I 

has  been  acconiplislied  from  this  loose  sense  of  con- 
trol and  examination.  These  were  the  characteris- 
tics of  the  first  stage  of  railway  management.  The 
stimulation  of  railway  building  on  these  conditions 
was  nothing  other  than  the  pursuit  of  magnitude  at 
the  expense  of  quality.  Whilst  we  congratulated 
ourselves  that  our  rapid  growth  was  unprecedented, 
we  did  not  count  the  conditions  of  that  growth — the 
evils  which  were  its  accompaniments. 

At  length  the  public  awoke  to  a  perception,  not 
of  the  problem  itself,  but  of  the  magnitude  of  the 
consequences  which  had  grown  under  this  encour- 
agement and  fostering.  Thereupon  the  disposition 
to  grant  subsidies  and  to  extend  unquestioned  ap- 
proval rather  suddenly  ceased,  and  in  its  place  there 
came  as  suddenly  a  disposition  upon  the  part  of  this 
same  public  to  repudiate  the  loans  that  were  made, 
and  to  turn  upon  the  "  captains  of  industry "  with 
the  fiercest  denunciation,  and,  in  some  instances,  to 
seek  to  gibbet  them  indiscriminately  as  malefactors. 
This  injudicious  hostility  organized  itself  into  retali- 
atory legislation  not  only  against  the  railway  man- 
agers personally,  but  also  against  the  railways,  and 
largely  out  of  this  condition  grew  other  corjDorations, 
in  conscious  and  unconscious  imitation  of  the  rail- 
way processes,  operating  as  direct  retorts  against 
that  management.  Courts  were  resorted  to  in  efforts 
to  test  the  question  of  the  criminal  conduct  of  mana- 
gers in  some  cases,  with  the  result  that  the  defend- 
ants were  usually  found  to  be  within  the  forms  of 


202  INDUSTRIAL   LIBERTY 

law  ;  tliat  their  acts  Avere  conducted  under  the  very- 
laws  Avliich  were  born  of  the  anxiety  of  the  people 
to  further  the  condemned  processes ;  besides  which 
the  violent  legislation  against  the  railways  was  in 
many  instances  also  found  abortive.  The  Granger 
legislation  proved  to  be  an  effort  to  accomplish 
impossibilities.  The  failure  of  such  judicial  and 
legislative  attempts  weakened  the  cause  of  their  pro- 
moters, and  were  seized  upon  by  the  railway  mana- 
gers themselves  as  illustrations  of  what  was  assumed 
to  be  the  impossibility  of  regulating  the  problem  by 
any  legislation  whatever.  Thus  public  opinion  ran 
from  one  extreme  to  another,  and  these  extremes 
were  equally  illogical.  Even  more  than  this,  the 
railway  managers  were  charged  not  only  with  doing 
the  very  things  which  they  had  been  urged  by 
the  public  to  do,  but  were  condemned  by  the  public 
for  not  doing  these  things  more  rapidly.  This  situ- 
ation is  one  of  the  solecisms  of  the  times. 

During  the  first  stages  of  the  railway  question  to 
which  I  have  referred  the  leaders  in  railway  manage- 
ment received  a  degree  of  admiration  and  a  freedom 
from  criticism  and  examination,  which  naturally  tend- 
ed to  enlarge  their  confidence  in  themselves.  They  thus 
easily  came  to  regard  themselves  as  the  creators  of 
the  industry  which  they  were  leading  ;  as  some  of  the 
Roman  emperors,  stimulated  by  like  admiration  at 
the  beginning  of  their  reigns,  came  to  proclaim  them- 
selves gods.  But  such  apotheoses  of  human  power 
could  not  in  the  nature  of  things  last.     So  far  as  the 


OBSTACLES  IN  THE   WAY  OF  REFORM  203 

public  were  concerned,  the  very  excess  of  this  adula- 
tion produced  a  reaction  of  excessive  abuse.  There- 
fore in  estimating  the  responsibilities  which  belong 
to  the  whole  situation,  we  shall  be  able  to  modify 
our  strictures  of  the  individuals  and  to  realize  that 
the  evil  consists  in  a  condition,  and  that  the  solution 
of  the  evil  must  proceed  from  a  quiet  examination  of 
that  condition.  Such  an  examination  requires  the 
exercise  of  a  passionless  interest.  Whilst  the  philippic 
may  be  a  means  of  arousing  passion,  it  is  useless  in 
investiojation.  Mere  abuse  has  no  office  here.  I  do 
not  mean  to  imply  that  there  are  not  individual  in- 
stances of  the  gravest  and  most  direct  personal  re- 
sponsibility. These  are  exceptions.  Generally  the 
individuals  who  constitute  the  corporate  interest  are 
not  special  creations  of  humanity.  They  are,  as  a 
class,  no  better  or  Avorse  than  a  like  number  of  men 
chosen  from  any  other  avocation.  They  exhibit  the 
powers,  feelings,  and  weaknesses  of  human  beings  in 
certain  conditions. 

Nor  do  I  believe  that  as  a  class  the  corporate 
managers  have  been  students  of  the  history  of  the 
middle  ages.  They  have  been  likened  to  mediaeval 
barons,  but  they  have  not  learned  their  practices, 
as  has  been  sometimes  supposed,  from  mediaeval  rec- 
ords. It  is  true  they  have  received  a  structure  in  the 
corporation  which  is  handed  down  from  the  middle 
ages,  and  that  around  this  structure  there  naturally 
grew  those  conditions  in  which  it  was  most  likely  to 
flourish ;  but  it  was  the  structure  itself  which  sug- 


204  INDUSTRIAL    LIBERTY 

gested  the  practices.  I  think,  moreover,  that  the 
creations  of  sudden  wealth  by  the  railway  managers 
have  often  been  due  not  to  their  special  abilities  or 
individual  aptitudes,  but  to  the  fortuitous  circum- 
stances by  which  they  became  managers  of  corporate 
structures,  and  in  some  instances  the  growth  of  this 
wealth  has  probably  surprised  the  acquirers  quite  as 
much  as  it  has  the  public. 

It  will  always  be  well  to  keep  in  mind  that  it  is 
by  I'eason  of  the  character  of  this  structure  that  the 
individual  conduct  is  distorted ;  for  the  corporate  con- 
science, is  always  inferior  to  the  conscience  of  the  in- 
dividual constituent  manager.  Mr,  Spencer  points 
this  out  as  a  familiar  fact.  "  A  bod}^  of  men,"  he 
says,  "■  ^vill  commit  as  a  joint  act  that  which  every 
individual  of  them  would  shrink  from  did  he  feel 
personally  responsible."  '     Not  infre(|uently  do  we 

'  Mr.  Spencer  further  notes  the  circumstance  that  "  Not  only  is  the  con- 
duct of  a  corporate  bo(Jy  thus  comparatively  lax,  but  also  the  conduct  tow- 
ards one.  There  is  ever  a  more  or  less  distinct  perception  that  a  broad- 
backed  company  scarcely  feels  what  would  be  ruinous  to  a  private  person  ; 
and  this  perception  is  in  constant  operation  on  all  railway  boards  and  their 
employes,  as  well  as  on  all  contractors,  landowners,  and  others  concerned  i 
leading  them  to  show  a  graspingness  and  want  of  principle  foreign  to  their 
general  behavior.  Again,  the  indirectness  and  remoteness  of  the  evils  pro- 
duced greatly  weaken  the  restraints  on  wrong-doing.  Men's  actions  are 
proximately  produced  by  mental  representations  of  the  results  to  be  antici- 
pated, and  the  decisions  come  to  largely  depend  on  the  vividness  with 
which  these  results  can  be  imagined.  A  consequence,  good  or  bad,  that  is 
immediate  and  clearly  apprehended,  influences  conduct  far  more  potently 
than  a  consequence  that  has  to  be  traced  through  a  long  chain  of  causation, 
and,  as  eventually  reached,  is  not  a  particular. and  readily  conceivable  one. 
Hence,  in  railway  affairs,  a  questionable  share-transaction,  an  exorbitant 
charge,  a  proceeding  which  brings  great  individual  advantage  without  ap- 
parently injuring  any  one,  but  which,  even  if  analyzed  in  its  ultimate  re- 


OBSTACLES  IN   THE    WA  Y   OF  REFORM  20$ 

find  examples,  therefore,  of  character  in  the  same  in- 
dividual which  seem  at  first  sight  to  present  a  curious 
moral  paradox.  There  are  among  the  corporate  man- 
agers men  who  are  chosen  for  the  performance  of 
the  duties  involved  in  the  private  trust  relation,  and 
who  perform  all  the  duties  of  this  relation  with  exact 
fidelity. 

I  have  no  doubt  that  there  are  men  prominent  in 
the  control  of  the  "  Standard  Oil  Trust  "  Avho  may  be 
scrupulously  careful  in  the  custody  of  the  property  of 
that "  Trust,"  notwithstanding  the  fact  that  they  have 
derived  this  very  property  through  diversion,  by 
violence  to  that  larger  and  real  trust  which  inheres 
between  the  managers  of  the  railways  and  the  pub- 
lic. We  should  be  altogether  mistaken,  therefore, 
were  we  to  argue  rigidly  from  the  railway  and  cor- 
porate methods  of  these  men,  that,  as  individuals, 
they  are  especially  deficient  in  moral  perception. 

What  is  it,  then,  that  makes  it  possible  that  the 
same  man  may  be  a  violator  of  one  trust  duty  and 
signally  faithful  to  another  ?  It  is  and  can  be 
nothing  other  than  the  fact  that  the  trust  is  recog- 
nized and  defined  in  the  one  case,  and  left  vague 
and  indefinite  in  the  other ;  that  the  public  per- 
ception  of  the  two   conditions  is  so  different  that, 

suits,  can  ])ut  very  circuitously  affect  unknown  persons  living  no  one  knows 
where,  may  he  brought  home  to  men  who,  could  the  results  be  embodied 
before  them,  would  be  shocked  at  the  cruel  injustices  they  had  committed — 
men  who  in  their  private  business,  where  the  results  can  be  thus  embodied, 
are  sufficiently  equitable." — Herbert  Spencer,  "Essays:  Moral,  Political, 
and  y-Esthetic,"  New  Vork,  187 1,  ji.  261. 


206  INDUSTRIAL   LIBERTY 

by  wliat  Locke  first  called  "the  association  of 
ideas,"  the  simple  mention  of  the  private  trust 
relation  calls  to  mind  the  guards  and  sanctities 
which  belong  to  it,  whilst  that  relation  of  trust 
which  accompanies  railway  management  (though  in 
all  respects  as  real)  is  not  thought  of  or  spoken  of 
as  if  it  had  any  such  sanctity.  Hence,  the  man 
grossly  violating  the  duties  of  one  relation  and  con- 
scientiously performing  those  of  the  other,  may  be 
the  same  man — the  same  character.  In  each  case  he 
is  actino;  in  accordance  with  the  existing  forms  of 
law.  In  one  case  these  forms  are  clear  and  definite, 
they  enact  and  support  a  principle ;  in  the  other 
they  are  vague  and  indefinite  and  ignore  a  principle. 
In  the  one  case  public  opinion  explicitly  condemns 
violation,  whilst  in  the  other  it  has  hitherto  not 
only  permitted,  but  to  a  considerable  extent  encour- 
aged it.  Personally,  we  often  find  the  corporate 
managers  and  "  trust  "  managers  to  be  citizens  who 
express,  and  doubtless  believe  they  manifest,  an  in- 
terest in  the  general  welfare  of  the  country,  while  in 
their  family  and  social  relations  they  are  models  of 
projiriety.  Therefore  in  considering  the  problem,  we 
must  not  confine  our  criticisms  to  the  individual 
alone.  We  must  realize  that  in  the  sum  of  the  respon- 
sibilities some  part  must  be  borne  by  the  people 
themselves  ;  and  in  estimating  the  chief  deterrents 
to  reform,  this  public  opinion  must  be  set  down  as 
one  of  them. 

In   considering  the  condition   of   })ublic    opinion, 


OBSTACLES  IN  THE    WAY   OF  REFORM  207 

particularly  upon  tlie  I'ailway  question,  it  is  interest- 
ing to  note  its  transitional  movement ;  and  there  is 
reason  for  liope  in  the  progressive  character  of  this 
movement  towards  substantial  and  permanent  re- 
form. I  have  indicated  that  there  are  two  stages  of 
the  railway  problem ;  more  accurately,  there  are 
three,  each  of  which  has  its  distinct  characteristics. 
In  the  first  or  constructive  stage  of  railway  enter- 
prise, as  we  have  seen,  the  public  were  possessed 
with  an  absorbing  desire  which  suppressed  examina- 
tion— a  zeal  not  tempered  with  discretion.  In  the 
second  stage  there  was  a  violent  resentment,  which 
expressed  itself  in  a  spirit  of  retaliation  and  indis- 
creet legislation — resentment  which  proceeded  with- 
out Judgment.  We  are  now  upon  the  threshold  of 
the  third  stage,  where  we  may  expect  a  more  pas- 
sionless examination  of  the  question  as  a  problem ; 
and  in  this  examination  we  may  hope  that  both 
the  too  cfreat  easferness  for  material  convenience  and 
the  too  great  personal  animosities  will  be  eliminated. 
In  such  an  examination  we  shall  realize  that  a 
great  deal  of  legislative  injustice  has  been  attempted 
and  accomplished  against  the  railway  interest ;  that 
this  interest  has  been  subjected  to  annoyances  cre- 
ated by  the  public  prejudice,  resulting  in  unreasona- 
ble and  unjust  exactions,  and  also  that  there  have 
been  many  difficulties  encountered  by  it  of  which 
the  public  are  to  a  large  degree  ignorant.  But  with 
the  realization  of  these  things  will  also  come  the  in- 
evitable conviction  that  corporate  management  has 


208  INDUSTRIAL   LIBERTY 

been  aggressive ;  tliat  this  is  its  essential  cliaracter ; 
and  that  it  cannot  safely  be  permitted  to  exercise 
functions  ^^'llicll  are  substantially  governmental,  or, 
as  I  have  shown,  -z^/if/'a-governmental,  except  as  cus- 
todians of  their  franchises  and  under  the  supervision 
of  the  State.  Here  is  the  place  for  the  statesman. 
And  the  true  statesman  I  conceive  to  be  the  man 
Avho  is  acquainted  with  the  best  political  thought  of 
his  time,  who  has  an  adequate  perception  of  the  pre- 
vailing conditions  and  political  needs,  and  who  thus 
equipped,  Avill  seek  to  formulate  into  legislation  just 
so  much  of  this  thought  as  can  be  appropriated  by 
the  time.  Coming  nnder  the  definition  of  Canning 
that  "  true  statemanship  consists  in  finding  the  line 
of  safe  change,"  he  will  nc^t  always  attempt  all  that 
seems  best  to  him,  because  thereby  he  might  fall  out 
of  accord  with  the  time  and  impair  his  own  influence 
for  good.  He  will  be  neither  the  theoretical  re- 
former, nor  the  over-enthusiastic  cod ifier,  contempt- 
nous  of  the  sanctions  of  the  past ;  nor  the  excessive 
conservatist,  blinded  by  partisanship  or  by  reverence 
for  form.  He  will  be  allied  to  no  class-interest. 
He  will  be  capable  of  pursuing  a  system  of  struc- 
tural analysis  of  the  industrial  and  economic 
conditions  of  civilization,  and  of  Ijroadening  the 
application  of  these  principles  beyond  the  forms  of 
law,  to  new  and  enlarged  conditions,  thus  aiming  to 
preserve  civilization  by  preserving  a  congruity  be- 
tween progressive  events  and  the  principles  of  justice 
and  political  liberty.    Whih^  aiming  at  nltimate  free- 


OBSTACLES  IN  THE   WAY  OF  REFORM  209 

dom,  and  with  faitli  in  its  final  accomj)lislinient,  he 
will  nevertheless  hold  that  this  ultimate  may  be 
best  reached  through  gradual  and  tentative  measures 
rather  tiian  by  radical  and  inexpedient  ones. 

I  am  aware  that  by  the  establishment  of  the  trust 
relation,  exercised  within  the  corporation  through  a 
careful  definition  by  statutory  legislation,  and  by  the 
erection  of  courts  to  enforce  the  performance  of  the 
duties  of  this  relation,  tlie  whole  problem  will  not 
yet  be  solved.  Besides  the  obstacles  which  I  have 
enumerated  in  the  way  of  reform,  there  are  some 
of  a  more  indirect  character.  In  our  complex 
system  of  government  with  its  incident  of  exclusive 
State  sovereignty,  no  federal  court  or  commission 
erected  by  the  general  government  can  exercise 
such  comprehensive  jurisdiction  as  is  requisite  for 
reaching  the  whole  coi'porate  system  of  the  country. 
The  power  of  such  a  federal  tribunal  would 
be  exhausted  with  the  examination  of  those  cases 
which  arise  in  inter-State  commerce,  and  with  the 
application  of  what  would  thus  be  at  best  but  a 
partial  remedy.  Such  a  federal  tribunal  could  not 
challenge  the  whole  evil  or  annul  a  charter  granted  by 
a  State,  nor  could  it  interfere  with  any  infractions, 
however  grave,  which  might  be  committed  by  a  rail- 
way or  a  corporation  wholly  within  the  boundaries  of 
a  State  and  whose  charter  was  derived  from  a  State. 
It  must,  therefore,  be  apparent  that  any  federal  inter- 
State  commission  as  at  present  constituted,  or  even  as 
at   present   possible   under   our   fundamental    law, 


2IO  INDUSTRIAL   LIBERTY 

would  of  itself  be  only  tentative  and  partial,  and  not 
sufficient  for  comj^lete  control  of  the  evil ;  tliat  whole- 
some as  it  would  be  in  paving  the  way  for  a  future 
course,  or  as  an  object-lesson  in  teaching  a  clearer 
realization  of  the  evil,  this  would  be  its  limit.  There 
remains,  then,  to  make  the  reform  more  adequate, 
the  necessity  for  homogeneous  legislation,  enacted 
by  the  several  States  of  the  Union  as  concurrent  with 
and  auxiliary  to  such  legislation  enacted  by  the 
federal  government.  This  is  necessary  in  order  to 
insure  harmonious  supervision  and  control  of  all 
<7M(2S^-public  corporations  by  the  State  and  federal 
governments ;  and  also  more  effectually  to  provide 
against  destructive  competition,  to  establish  the  trust 
relation,  to  restrict  the  franchises,  and  thus  guard 
the  equal  political  right  of  the  citizen.  This  legis- 
lation can  only  proceed  from  public  opinion — edu- 
cated on  this  subject.  I  am  aware  that  even  with 
such  homogeneous  legislation  and  the  erection  of  such 
tribunals  with  comprehensive  powers,  the  whole  ques- 
tion will  not  yet  be  solved.  There  will  still  remain  the 
possible  competition  which  may  come  from  Canada, 
from  the  Transcontinental  and  other  I'ailways,  and 
from  Panama  ;  besides  the  possible  future  complica- 
tions which  may  come  from  the  Mexican  railways. 

But,  not^vithstauding  these  interferences,  and  all 
of  the  obstructions  which  I  have  mentioned,  the  first 
thing  to  be  insisted  upon  as  a  pre-requisite  is  the 
establishment  of  relations  between  the  railway  and 
the   government   which    shall    aim    to    secure    the 


OBSTACLES  IN  THE    WAY   OE  REFORM  211 

essential  ris-lits  of  the  citizen :  a  declaration  of 
specific  trust.  This  establishment  is  the  inevitable 
pre-requisite  for  dealing  with  the  evil.  The  ques- 
tion lies  across  the  very  threshold  of  reform,  and 
it  must  first  be  answered  before  we  pass,  before  we 
can  address  ourselves  to  any  of  the  details  of  the 
problem ;  and  wlien  we  have  so  answered  we  will 
doubtless  find  that  those  details,  whatever  they  are, 
and  however  diflicult  they  may  seem  to  us  now,  will 
be  easier  of  solution  then  than  they  possibly  can  be 
by  leaving  this  question  unanswered  and  occupying 
ourselves  directly  with  them. 

As  may  easily  be  inferred  from  what  has  al- 
ready been  said,  it  is  probable  that  to  complete  the 
machinery  which  will  be  required  for  the  efficient 
guarding  of  the  trust  relation,  some  constitutional 
changes  will  become  necessary  for  the  erection  of 
the  appropriate  federal  tribunals.  If  what  I  have 
set  forth  has  the  warrant  of  fact  and  reason,  such  a 
course,  radical  as  it  may  seem  to  be,  will  be  justified 
by  the  gravity  of  the  occasion.  The  highest  value  of 
a  constitution  lies  in  its  being  in  accord  with  the 
necessities  of  exlstins;  civilization.  If  then  it  be 
necessary  to  aj^peal  from  any  constitution  to  the  rea- 
son, humanity,  and  justice  which  lie  behind  all  con- 
stitutions, from  which  they  derive  their  vital  being, 
and  by  which  alone  they  can  be  preserved  from 
decay,  then  it  is  the  course  of  wisdom  to  make  the 
appeal.  In  order  to  accomplish  this  there  will  be  no 
necessity  to  modify  any  principle.     All  that  will  be 


212  INDUSTRIAL   LIBERTY 

needed  is  that  we  surround  existing  principles  with 
a  greater  conservative  force  of  law  and  equity  ;  that 
Avithout  seeking  to  create  any  new  principle,  we  shall 
be  careful  not  to  violate  any  old  one.  Actuated  by 
the  sole  motive  of  preserving  the  great  central  prin- 
ciple of  equal  individual  and  political  right,  the  es- 
sential foundation  of  the  republic,  we  shall  so  fortify 
this  principle  that  all  industrial  methods  shall  be 
brought  into  accord  with  it  in  order  to  secure  honesty 
between  custodian  and  owner — fairness  between  one 
political  unit  and  another — and  thus  justice  to  all. 

I  think  we  may  safely  base  our  faith  in  the  gene- 
ral progress  of  our  civilization  upon  the  qualities  of 
the  prevailing  race,  or  rather  upon  what  we  know  of 
the  lineage  of  the  dominant  race  in  America,  which, 
for  want  of  a  better  term,  we  call  the  Anglo-Saxon. 
It  is  from  this  race  that  Western  civilization  has 
derived  its  progress,  and  it  is  from  the  instinct  of 
this  race  that  I  think  we  may  reasonably  hope  to 
preserve  our  acquisitions  and  continue  that  progress. 
Its  representative  I  will  call  the  Anglo-Saxon  unit. 
There  is  not  so  much  of  what  we  can  call  briglit  in- 
telligence in  this  unit  as  in  some  others.  The  Greek, 
in  the  height  of  his  civilization,  as  Galton  and  Mat- 
thew Arnold  have  shown,  was  superior  to  the  Saxon 
type,  both  in  intellectual  and  in  physical  qualities.^ 
Plato  was  doubtless  more  purely  a  philosopher  than 
Bacon  ;  but  with  all  the  intellectual  superiority,  the 
difference  in  the  material  and  moral  advancement 
between  the  two  races  of  wliich  these  philosophers 

'  Galton's  "  Hereditary  Geniu>,"  London,  1S69,  p.  342. 


OBSTACLES  IN  THE   WAY  OF  REFORM  213 

were  types,  is  incomparably  in  favor  of  the  Anglo- 
Saxon.  The  Greek  reasoned,  as  Bacon  says,  in  a 
circle.  The  Greek  mind  was  deductive  ;  the  Eng- 
lish and  American  minds  are  inductive.  The  differ- 
ence between  the  philosophy  which  Greece  produced 
and  that  which  England  produced  is,  as  Bacon 
has  said,  that  the  former  bore  no  fruit  whilst  the 
latter  does.  A  somewhat  similar  difference  may  be 
noticed  between  the  French  nation  and  the  English. 
The  French  drew  an  abstract  idea  of  liberty  from  their 
men  of  letters.'  The  doctrinaires  furnished  the  na- 
tion, and  the  nation  accepted,  a  definition  of  liberty 
which  was  absolute,  abstract,  and  without  qualifica- 
tion. From  the  extensive  premise  adopted  by  the 
French,  liberty  is  social  equality,  political  equality, 
and  fraternity,  divested  of  the  practical  correlatives 
of  duty  and  self-restraint.  Thus  taught,  the  nation 
proceeded  by  rigorous  logical  processes  to  social- 
ism and  communism.  This,  I  say,  arose  from  the 
deductive  character  of  the  French  mind.  The  dif- 
ference, therefore,  between  the  Anglo-Saxon  and 
the  French,  the  difference  in  the  causes  which  led 
to  revolution  in  England  and  in  France,  and  the 
difference  in  the  influence  of  revolution  upon  the 
different  peoples,  mark  the  difference  of  race.^     As 

'  "  The  misfortunes  of  P'rance  since  the  Revohition  have  been  due  to  no 
one  circumstance  so  markedly  as  to  the  predominance  which  the  man  of 
letters  has  acquired  in  that  country  ;  and  this  fatal  predominance  was  first 
founded,  though  assuredly  not  of  set  design,  by  Voltaire."  (See  "Voltaire," 
by  John  Morley,  New  York,  1878,  p.  44.) 

^  Mr.  Lecky  also  draws  a  fine  contrast  between  the  characteristics  of 
the  French  and  Anglo-Saxon  nations.  See  "History  of  European  Morals," 
New  York,  1871,  p.  160.) 


214  INDUSTRIAL   LIBERTY 

Morley  pertinently  asks :  "  Who  shall  measure  the 
consequence  of  this  difference  in  the  history  of  two 
great  nations ;  that  in  France  absolutism  in  Church 
and  State  fell  before  the  sine\vy  genius  of  stark 
reason,  while  in  England  it  fell  before  a  respect 
for  social  convenience,  protesting  against  monopolies, 
benevolences,  ship-money  ?  That  in  Fi^ance  specu- 
lation had  penetrated  over  the  whole  field  of  social 
inquiry,  before  a  single  step  had  been  taken  towards 
application,  while  in  England  social  principles  were 
applied,  before  they  received  any  kind  of  specula- 
tive vindication  ?  That  in  France  the  first  effective 
enemy  of  the  principles  of  despotism  was  Voltaire, 
poet,  philosopher,  historian,  critic ;  in  England,  a 
band  of  homely  squires  % " '  Our  progress  of  civili- 
zation in  America,  with  all  its  lapses,  is  derived  from 
a  practical  idea  of  liberty,  from  habits  of  thought 
which  come  from  daily  intercourse,  and  w^hich 
are  inductive ;  and  it  is  upon  this  that  our  hope 
for  our  particular  civilization  rests.  It  is  through 
such  habit  of  mind  that  we  can  take  advantage  of 
whatever  failures  of  theory  there  may  be  to  reform 
our  mistakes.  It  is  thus  that  we  illustrate  to  our- 
selves the  essential  co-relation  between  duty  and 
right.  The  great  characteristic  of  our  race  is 
its  instinct  for  freedom.  This  instinct  may  not  in 
the  highest  sense  be  called  intellectual,  but  it  is  per- 
tinacious and  continuous,  and  thus  it  is  illustrated  as 
a  potent  factor  throughout  history. 

'    "  Voltaire,"  by  John  Morley,  New  York,  1878,  p.  2i. 


OBSTACLES  IN  THE   WAY  OF  REFORM  21  5 

Indeed,  it  may  be  said  that  self-preservation  of 
inherited  quality  is  a  signal  characteristic  of  all 
races,  that  each  generation  receives  its  qualities  from 
its  predecessor,  and  transmits  them  but  slightly  al- 
tered to  the  generations  which  folloAV.  Whilst  it 
is  true  that  no  adequate  account  can  be  given  of 
current  social  and  political  phenomena  until  due 
allowance  has  been  made  for  the  modifying  results 
which  come  from  current  social  dynamic  causes,  yet, 
with  all  this,  the  main  features  of  races  preserve 
themselves  from  generation  to  generation  with  re- 
markable continuity.'  And  this  may  be  said  with 
more  force  of  the  Anglo-Saxon  race  than  of  any 
other,  for  it  holds  a  particular  pre-eminence  among 
all  the  races  of  the  world  as  a  preserver  of  its  own 
hereditary  qualities.  The  main  features  of  civiliza- 
tion, therefore,  which  belong  to  England  and  Amer- 
ica are  more  eminently  due  to  the  circumstance  of 
this  persistence  than  to  any  other  single  cause. 

Our  unit  has  come  through  Hengest  and  Horsa, 
who  planted  him  in  England.^  There  fixed,  although 
he  was  overcome  by  the  superior  force  and  intellect 
of  the  Norman  in  his  conquest,  he  persistently  asserted 
himself  until  he  appropriated  his  master,  the  Norman, 
and  his  conquest.^    In  America  he  overcame  the  Span- 

"'Ancicnt  Law, "by  Sir  Henry  Sumner  Maine,  New  York,  1875,  p.  112. 

^"  When  the  keels  of  Hengest  drew  near  the  Kentish  shore,  they  bore  with 
them  the  germs  of  the  American  commonwealih,  as  well  as  the  germs  of 
the  English  kingdom."  ("  The  English  People  in  its  Three  Homes,"  by 
Edward  A.  Freeman,  Philadelphia,  1882,  p.  37.) 

^This  notwithstanding  the  Norman  was  himself  part  Teuton. 


2l6  INDUSTRIAL   LIBERTY 

isli  and  the  FreDcli,  and  possessed  tlie  country.  Mr. 
Fiske  has  indicated  the  importance  of  the  battle  of 
Quebec  and  the  victory  of  Wolfe  as  the  turning-point 
that  determined  which  of  the  two  nations,  the  English 
or  the  French,  should  finally  predominate  in  Amer-^ 
ica ; '  but  it  seems  to  me  that  the  answer  to  this 
question  lies  not  so  much  in  the  issue  of  one  battle, 
as  in  the  fact  of  the  pertinacity  of  the  English.  If 
defeated  at  the  Heights  of  Abraham,  there  Avould 
probably  only  have  been  a  postponement  of  the 
ascendancy  of  the  English  race,  yA\h  little  doubt 
that  this  ascendancy  would  afterwards  have  been 
acquired  by  the  pertinacity  of  the  Anglo-Saxon. 
The  Anglo-Saxon  unit  is  slow  to  move.  As  I  have  said, 
he  lacks  the  quickness  of  his  Celtic  neighbor ;  but, 
slow  as  he  is,  this  certain  doggedness  of  jDurpose  and 
directness  which  characterize  him,  give  to  him  a 
firmer  hold  upon  freedom  than  that  possessed  by 
any  other  type  of  human  being.  Transplanted  in 
America,  he  has  shown  the  strength  of  fibre  and  the 
power  to  assimilate  all  of  the  other  less  strong  units 
which  have  come  into  contact  with  him. 

Here  he  fixed  his  bounds  by  liis  sense  of  conven- 
ience, it  must  be  owned,  rather  than  by  his  intelli- 
gence or  discrimination.  He  gave  his  acc^uiescence 
to  a  slavery  not  of  his  own  race,  but  of  another ;  and 
although  for  his  own  race  the  bounds  were  fixed 
without  certainty  as  to  the  whole  of  human  freedom, 

'  "  American  I'olitical  Ideas,"  by  John  Fiske,  New  York,  1885,  pp.  56 
and  125. 


OBSTACLES  IN   THE   WAY  OF  REFORM  21/ 

they  were  more  comprehensive  than  any  whicli  pre- 
ceded them.  Having  advanced  to  this  stage,  he 
halted.  Thereafter  he  progressed  with  rather  a  dull 
peree[)tiou  and  a  leaden  step,  when  this  same  slavery 
claimed  continued  existence  as  a  right,  and  came  ag- 
gressively across  his  path.  As  he  permitted  it  to  be 
recognized  by  the  Constitution,  as  it  was  upheld  by 
Judicial  decision,  he  did  not  disturb  it,  since  it  did 
not  seem  to  be  directly  personal  to  him.  But  when 
its  immediate  champions  threw  down  the  gauge  of 
battle  and  defied  his  own  birthright,  he  arose  like  a 
giant,  annihilated  the  wrong,  reconstructed  his  civili- 
zation, and  reasserted  his  freedom.  Having  taken  this 
step,  he  again  rested.  He  is  now  more  easily  aroused 
by  reference  to  the  past  annihilated  wrong,  although 
it  is  a  dead  issue,  than  by  many  existing  evils  which 
lie  immediately  about  him. 

The  same  principle  of  action  controls  his  conduct 
in  industrial  matters.  Beguiled  by  a  sense  of  con- 
venience, he  seems  only  faintly  to  feel  the  intrusion 
of  the  corporate  trespasser  upon  his  domain.  He  is 
told  and  he  hears  with  dull  ears  of  the  treachery  of 
his  delegates  chosen  to  guard  his  right.  He  only 
dimly  sees  the  enemies  masked  behind  the  forms  of 
law,  and  he  is  not  alert  to  divine  their  purposes  or 
to  pursue  his  remedy.  Now  and  then,  it  is  true,  he 
is  aroused  by  some  special  act  of  violence,  but  he 
soon  falls  as^ain  into  his  accustomed  indifference. 
Meanwhile  wrongs  about  him,  stimulated  by  his  in- 
attention, continue  to  grow,  until  at  last  by  their 


2l8  INDUSTRIAL   LIBERTY 

volume  tliey  are  beginning  to  force  themselves  upon 
him.  When  he  is  at  length  brought  face  to  face 
with  the  question  of  his  freedom  and  can  no  longer 
delay  the  answer,  then,  however  overborne  by  trick, 
chicane,  and  fraud,  I  have  no  doubt  that  he  will 
again  determine  that  "  the  nation  shall,  under  God, 
have  a  new  birth  of  freedom,  and  that  a  government 
of  the  people,  by  the  people,  and  for  the  people 
shall  not  perish  from  the  earth."  At  each  successive 
great  contest  his  realization  gains  some  new  force. 
The  measurement  of  liberty  is  a  little  more  carefully 
taken  than  ever  before ;  the  lesson  is  a  little  more 
closely  learned,  that  vigilance  is  the  price  of  liberty. 
Thus  something  is  gained  that  is  not  thereafter  lost ; 
and  so  his  civilization  takes  a  new  step  which  it 
partly  at  least  keeps.  When  African  slavery  was 
stricken  down,  it  was  stricken  down  forever.  That 
this  sovereio-n  unit  when  brouo;;ht  face  to  face  with  the 
new  antagonism  will  rout  it,  I  think  there  can  be  no 
doubt.  The  only  present  question  is  whether  his  in- 
telligence may  not  be  stimulated  to  realize  the  prob- 
lem of  his  riofht — to  overcome  the  antasfonisms  to 
that  rio-ht — before  a  resort  to  blood  and  demolition 
becomes  necessary. 

Mr.  Freeman  traces  the  lineage  of  the  unit  to 
AiTninius,  that  historic  hero  of  the  Teutonic  race.' 

'  "  I  have  little  doubt  that,  if  the  distinction  is  to  be  drawn  at  all,  Ar- 
minius  and  his  fellows  would  be  found  to  belong  to  the  Low-Dutch  rather 
than  to  the  High-Dutch  division  of  the  Teutonic  race.  But  it  may  be  safer 
to  look  on  that  distinction  as  one  of  later  date,  and  to  say  that,  up  to  the  fifth 
century,  the  Teuton  whose  descendants  were  to  abide  in  Germany  and  the 


OBSTACLES  IN  THE   WAY  OF  REFORM  219 

Our  lieritao-e  from  the  Teutonic  race  was  the  Towu- 
meeting,  as  a  guard  for  the  preservation  of  political 
liberty.  I  think  I  may  add  that  the  gift  which  we 
hav^e  accepted  from  Home  is  the  Corporation.'  This 
heritao'e  and  this  o-ift  stand  in  the  same  autaofonism 
now  as  when  Arminius  smote  Varus,  shattered  and 
'drove  back  the  Koman  legions  from  the  country  of 
the  Rhine.  They  are  the  old  foes  which  confront 
each  other  with  new  faces.  They  present  to  us  again 
the  c[uestion  whether  we  shall  accept  the  Roman 
gift  or  our  Saxon  heritage  as  predominant — the  Cor- 
poration or  the  Town-meeting.  In  the  coming  con- 
flict, whethar  the  result  shall  be  by  intelligence  or 
by  the  last  resort  to  revolution,  the  ultimate  of  civili- 
zation will  not  be  lost.  The  sum  of  all  the  tenden- 
cies will  assert  itself.  If,  interrupted  by  such  inter- 
Teuton  whose  descendants  were  to  make  the  voyage  to  Britain  had  one 
common  history,  exactly  as,  up  to  the  seventeenth  century,  the  Englishman 
whose  descendants  were  to  abide  in  Britain  and  the  Englishman  whose  de- 
scendants were  to  make  the  voyage  to  America  had  one  common  history. 
.  .  .  When  Augustus  vainly  called  on  Varus  to  give  back  the  legions 
which  had  fallen  beneath  the  Cheruscan  sword,  he  was  mourning  for  an 
event  but  for  which  we  could  never  have  stood  here  as  we  now  stand.  But 
for  that  memorable  day  in  the  childhood  of  our  people,  neither  the  League 
of  the  Hansa  nor  the  Union  of  Utrecht,  neither  the  Great  Charter  of  Eng- 
land nor  the  Federal  Constitution  of  America,  could  ever  have  had  a  place 
on  the  page  of  history."  ("  The  English  People  in  its  Three  Homes,"  by 
Edward  A.  Freeman,  Philadelphia,  1882,  pp.  33  and  37.) 

'  Blackstone  says  :  "  The  honor  of  originally  inventing  these  political 
constitutions  [the  corporations]  entirely  belongs  to  the  Romans.  They 
were  introduced,  as  Plutarch  says,  by  Numa  ;  who,  finding,  upon  his  acces- 
sion, the  city  torn  to  pieces  by  the  two  rival  factions  of  Sabines  and  Ro- 
mans, thought  it  a  prudent  and  politic  measure  to  subdivide  these  two  into 
many  smaller  ones,  by  instituting  separate  societies  of  every  manual  trade 
and  profession."     (See  "  Blackstone's  Commentaries,"  Book  I.,  p.  469.) 


220  INDUSTRIAL  LIBERTY 

ferences  as  cupidity,  bad  legislation,  ignorance  of 
economic  laws,  revolution  results,  I  believe  these 
tendencies  will  only  be  delayed,  not  finally  overcome. 
If  furthered  by  the  study  of  political  needs  and  the 
adjustment  of  them  to  the  natural  law,  the  result 
will  be  wholesome  industrial  and  political  progress. 
Thus  in  the  larger  sense  it  becomes  a  question  of' 
time ;  and,  in  the  event  of  the  interruption  from  our 
disobedience  of  natural  laws,  the  revolution  becomes 
an  object-lesson  to  enable  us  to  realize  that  ultimate 
irresistible  force  which  we,  through  our  cupidity, 
selfishness,  and  passion,  were  unable  otherwise  to 
detect.  After  revolution,  with  its  attendant  dives- 
ture  of  all  interests  and  demolition  of  all  privileges 
based  on  wrongs,  mankind  is  thrown  back  upon 
the  simpler  factors  of  political  problems,  and  thus 
begins  to  reconstruct;  and  as  the  builder  whose 
foundations  are  demolished  comes  to  pay  closer 
attention  to  the  new  foundations  necessary  for  re- 
building, so  a  nation,  gathering  together  the  results 
of  revolution,  is  apt  to  look  to  the  foundations  of 
the  new  structure,  to  eliminate  from  those  founda- 
tions the  weaknesses  which  produced  the  down- 
fall. With  such  an  object-lesson  before  us,  we  shall 
come  to  learn  that  in  a  republican  state  the  preser- 
vation of  the  interests  of  the  unprotected  is  identical 
with  the  preservation  of  the  interests  of  all;  that 
political  right  has  thus  essentially  an  equality  which 
cannot  be  wrested  by  the  strong  from  the  weak 
without  ultimate  disaster.     When  this  lesson  comes 


OBSTACLES  IN  THE   WAY   OF  REFORM.  22  1 

to  be  thoroiiglily  learned,  we  sliall  realize,  as  a  con- 
sequence, tliat  there  can  be  no  sucli  thing  as  politi- 
cal class  interests.  If,  as  I  have  said,  the  growth 
toward  liberty,  due  to  the  Anglo-Saxon  instinct, 
which  was  exercised  through  the  Town-meeting, 
warrants  this  belief  of  ultimate  victory  over  that  gift 
which  ^ve  have  chosen  to  accept  from  Rome  in  the 
Corporation,  for  us  the  question  of  immediate  import- 
ance is  whether  we  cannot  recognize  the  evils  now, 
whether  we  cannot  define  and  realize  their  relation 
to  political  liberty  to-day.  If  we  can,  we  shall  be 
wise ;  because  we  shall  thus  avoid  the  violence 
of  revolution.  This  can  only  be  accomplished 
through  the  vital  realization,  by  the  citizen,  that  his 
freedom  is  essentially  co-related  to  the  freedom  of 
others ;  that  this  freedom  is,  as  I  have  pointed  out, 
an  equation, — that  it  is  necessary  for  each  one  of 
us  to  insist  upon  the  political  equality  of  every  one 
as  an  inseverable  condition  of  the  right  of  each  and 
of  all 


CHAPTEE    VIII 


PROTECTION 


I  HAVE  already  incidentally  referred  to  protection 
in  its  relation  to  the  hybrid  "trust."  I  will  now 
undertake  to  deal  with  it  somewhat  more  fully,  in 
order  to  illustrate  its  qualities  by  the  definition  which 
I  have  given  of  industrial  liberty.  In  doing  this  I 
will  not  attempt  to  consider,  in  a  particular  way, 
those  statistics  which  are  usually  employed  in  tariff 
discussions ;  nor  will  I  attempt  to  deal  specifically 
with  any  of  the  pending  or  proposed  efforts  at  legis- 
lation, or  to  consider  those  plans  for  immediate 
reform  Avhich  suggest  only  modified  changes  in  the 
existing  status.  My  purpose  is  solely  to  discuss  the 
question  as  a  principle  of  republican  government 
and  as  it  relates  to  ultimate  political  and  industrial 
consequences.  This  manner  of  treatment  is,  of  course, 
radical. 

I  do  not  mean  by  this  last  statement,  however,  to 
indicate  a  belief  that  any  great  sudden  change  in 
the  condition  of  our  tariff  duties  would  be  either 
wise  or  desirable.  I  think  that  ^A'hat  is  altogether 
more  important  than  any  immediate  change  by  legis- 
lation, is  a  clear  understanding  of  the  fundamental 


PROTECTION  223 

basis  of  the  questions  involved  in  tariff  reform.  Such 
understanding  ought  to  be  a  prerequisite  to  the  first 
step,  not  only  in  order  that  a  sound  basis  for  the 
change  may  be  established,  but  that  thereafter  we 
may  have  a  continuous  and  uninterrupted  progressive 
movement  in  a  wholesome  direction.  In  studying 
the  subject,  therefore,  analytically,  we  may  arrive 
at  conclusions  which  ~\vill  not  only  enable  us  to 
determine  with  more  clearness  the  direction  in  which 
our  legislation  should  move,  but  we  may  also  thereby 
be  enabled  from  time  to  time  to  test  the  character  of 
our  progress,  and  to  reassure  ourselves  of  the  cor- 
rectness of  our  course.  For  such  an  examination  we 
need  rather  to  expel  from  our  minds  the  statistics 
and  complicated  details  of  the  tariff,  and  to  grasp 
firmly  that  fundamental  law  of  industrial  liberty 
which  underlies  the  whole  subject. 

It  seems  at  first  view  an  entirely  simple  and  fair 
proposition,  that  when  a  little  assistance  is  asked  in 
behalf  of  a  new  industry  struggling  for  existence  in 
a  new  country,  such  assistance  to  come  from  all 
of  the  citizens  of  the  republic,  it  ought  readily  to  be 
given,  if  thereby  we  may  aid  that  industry  to  estab- 
lish itself  and  produce  a  new  activity  through  the 
development  of  material  resources.  When  we  ana- 
lyze this  proposition,  however,  we  discover  that  the 
classes  which  receive  such  assistance  are  made  up  of 
individuals  or  of  private  corporations;  that  their 
enterprises  consist  of  industries  in  the  management 
of  which  the  personal  profit  of  the   owner  is  the 


224  INDUSTRIAL   LIBERTY 

definite  and  prevailing  motive ;  that  the  contribution, 
on  the  other  hand,  which  furthers  these  industries, 
is  a  public  contribution,  the  assumed  object  of 
which,  somewhat  indefinite,  is  the  public  welfare. 
The  motive  which  actuates  the  individuals  and  pri- 
vate corporations  engaged  in  the  fostered  industry  is 
not  necessarily,  nor  is  it  likely  to  be,  patriotic,  what- 
ever the  pretence  may  be  to  the  contrary.  It  is 
essentially  and  predominantly  a  motive  of  self- 
interest,  and  the  enterprises  are  enterprises  which 
are  embarked  in  for  gain.  Obviously  this  is  a  con- 
dition which  does  not  naturally  generate  disinter- 
ested patriotism.  The  inevitable  tendency  of  the 
owners  of  a  private  interest,  which  derives  assistance 
through  exaction  by  indirect  contribution  from  the 
general  public,  is  a  tendency  to  lean  upon  the  sup- 
port received,  and  as  far  as  possible  to  perpetuate 
that  support. 

Thus  we  find  among  the  different  members  of  the 
protected  class,  varied  as  their  special  industrial  aims 
are,  that  in  their  relation  to  the  government  as  re- 
cipients of  assistance,  they  all  possess  a  common 
purpose,  in  seeking  this  assistance ;  and  in  the  fur- 
therance of  this  purpose  there  is  an  inherent  tendency 
among  them  towards  a  political  solidarity.  Accord- 
ingly, like  the  qiiasi-)^v\i^\Q,  corporate  interests,  they 
have  been  growing  each  year  more  coherent,  more 
organized,  more  unified,  and  therefore  more  difiicult 
to  be  dealt  with  by  the  general  and  less  coherent 
public. 


PROTECTION  225 

When  tlie  representatives  of  this  interest  proclaim, 
as  they  do,  and  possibly  think,  that  the  permanent 
well-being  of  the  nation  rests  upon  the  fact  that 
their  industries  are  supported  by  exactions  from  the 
sum  of  the  industries  of  the  nation,  it  is  easy  to  see 
how  they  come  to  assume  that  this  fact  exists  by 
virtue  of  a  fundamental  principle  of  government; 
and  thus  that  protection  is  not  an  expedient  or  a 
policy,  but  a  principle.  It  is  under  this  delusion  or 
pretence  that  the  emotional  and  sentimental  states- 
man finds  his  opportunity,  hiding  the  consideration 
of  the  fundamental  principles  of  liberty  under  those 
vague  political  generalities  which  deal  only  with  the 
immediate  results  of  material  prosperity.  Here,  also, 
we  find  the  emotional  and  sentimental  statistician, 
who  seeks  to  supplant  the  consideration  of  funda- 
mental I'ights  and  duties  by  an  array  of  figures 
which  shows  the  totality  of  the  nation's  growth, 
and  which  conceals  under  the  grand  total  the  mis- 
distribution  of  this  sum, — a  misdistribution  by  which 
the  industries  of  part  of  the  citizens  are  depressed, 
in  order  that  the  industries  of  a  class  may  be  over- 
stimulated. 

The  tarifl:,  as  a  protective  agent,  was  instituted 
within  two  years  after  the  Constitution  was  adopted. 
In  the  House  of  Representatives  of  the  Congress  of 
1789,  Mr.  Hartley,  a  member  from  Pennsylvania, 
suggested  it  in  these  modest  terms :  "  I  think  it  both 
politic  and  just  that  the  fostering  hand  of  the  general 
government  should  extend  to  all  those  manufactures 


226  INDUSl^RIAL   LIBERTY 

wliich  tend  to  national  utility."  In  a  new  country, 
and  especially  in  a  country  whose  industries  had 
been  subdued  for  a  long  time  by  the  narrow  and  re- 
pressive policy  of  England — a  policy  by  which  man- 
ufacturing had  become  paralyzed, — it  doubtless  ap 
peared  to  most  minds  that  a  little  sacrifice  from 
each  citizen,  made  by  a  general  contribution,  indirect 
and  therefore  not  likely  to  be  felt,  was  necessary  for 
the  ^veil-being  of  the  nation.  It  was  generally  be- 
lieved that  this  "fostering  hand"  was  only  to  be 
tempoi'arily  extended ;  that  it  would  create  whole- 
some industries  all  over  the  land ;  that  these  would 
naturally  and  easily  grow  into  a  condition  where 
they  would  become  self-supporting;  and  that  there- 
after their  owners  would  of  themselves  relinquish 
further  assistance  from  the  government,  and  that  the 
industries  would  continue  to  grow,  conferring  per- 
manent and  universal  benefit.  The  leading  advocates 
of  the  first  tariff  measures  did  not  hesitate  to  give 
this  promise  ;  besides,  it  w^as  implied  by  their  whole 
conduct  of  the  question ;  and  thus  the  policy  became 
inaugurated  without  careful  examination.  As  it 
seemed  to  interfere  with  no  principle,  to  contain  no 
hidden  evil,  to  tend  to  no  mischief,  it  was  accepted 
with  all  its  exterior  appearance  of  innocence,  liber- 
ality, patriotism,  and  wisdom. 

Its  consequences  of  inequality,  however  thus  un- 
realized at  first  by  reason  of  their  indirectness,  soon 
came  to  manifest  themselves.  As  the  Southern 
States  were  entirely  agricultural  and  the  New  Eng- 


PROTECTION  227 

land  States  largely  manufacturiDgj  the  first  evidence 
of  this  realization  came  from  the  South.  The  tariff 
began  to  be  considered  as  a  burden  upon  the  agri- 
cultural interests  of  the  South,  as  an  exaction  from 
those  interests  for  the  support  of  the  manufactur- 
ing interests  of  the  North,  and  especially  those  of 
New  England.  In  this  way  the  question  came  into 
prominent  political  discussion.  It  generated  partisan- 
ship of  the  bitterest  kind,  and  culminated  in  what 
are  known  as  the  "Nullification  Laws"  of  South 
Carolina.  Had  it  not  been  for  this  miserable  turn 
in  the  contest,  involved  as  it  was  with  the  tariff 
called  the  "tariff  of  abominations,"'  or  had  the 
question  of  protection  then  been  raised  before  the 
Supreme  Court  of  the  United  States  as  a  constitu- 
tional   question,  it  is  not  unlikely  that  the  policy 

'  "The  grievance  of  the  South  in  1S28  is  undeniable.  So  long  as  the 
exports  of  the  country  were  almost  exclusively  Southern  products — cotton 
and  tobacco, — and  so  long  as  the  federal  revenue  was  almost  entirely  de- 
rived from  duties  on  imports,  it  is  certain  that  the  Southern  industries 
either  supported  the  federal  government  or  paid  tribute  to  the  Northern 
manufacturers.  The  Southerners  could  not  even  get  a  hearing  or  patient 
and  proper  study  of  the  economic  questions  at  issue.  Their  interests  vv'cre 
being  sacrificed  to  pretended  national  interests,  just  as  ufider  the  embargo 
the  interests  of  New  England  were  sacrificed  to  national  interests.  In 
each  case  the  party  which  considered  its  interests  sacrificed  came  to  regard 
the  Union  only  as  a  cage,  in  which  all  were  held  in  order  that  the  stronger 
combination  might  plunder  the  weaker.  No  amount  of  precept  or  em- 
phasis can  make  the  Union,  which  is  the  paramount  civil  interest  of  the 
American  people,  strong  and  permanent,  if  any  section  or  party  in  it  has 
reason  to  believe  that  its  interests  are  sacrificed  in  the  Union  ;  and  the 
Union  can  never  be  secure  unless  there  is  a  disposition  in  the  predominant 
majority  at  any  time  to  listen  with  patience  to  any  remonstrance,  and  to 
exercise  power  with  moderation  and  justice."  (See  "Life  of  Andrew 
Jackson,"  by  William  Graham  Sumner,  Boston,  18S6,  p.  21b.) 


228  INDUSTRIAL  LIBERTY 

would  have  received  a  repulse,  if  not  a  final  over- 
throw. 

But  however  this  may  be,  with  varjang  stages  of 
growth  and  decline  arising  from  the  alternate  pre- 
dominance of  the  manufacturiug  States  on  the  one 
hand  and  the  agricultural  opposition  on  the  other, 
the  contest  continued  until  the  War  of  the  Rebel- 
lion. Then,  as  all  civil  rights  were  suspended, 
whatever  quality  of  volition  there  had  been  in  assist- 
ing the  fostered  interests  was  supplanted  by  the 
necessity  of  raising  means  to  support  the  war. 

Thereafter,  the  manufacturing  industries  were  pro- 
tected not  from  any  motive  of  fostering,  but  entirely 
by  reason  of  the  necessities  of  the  nation,  since  these 
necessities  absorbed  all  other  considerations.  At  the 
conclusion  of  the  war  the  extraordinary  debt  which 
had  been  created  afforded  pretext  for  the  continu- 
ance of  the  methods  for  raising  the  revenue.  It  was 
more  to  secure  this  continuance  than  anything  else 
that  the  protectionists  gave  their  united  support  to 
the  rapid  payment  of  the  debt.  So  long  as  protec- 
tion continued  as  a  result  of  the  real  or  seeming 
necessities  of  the  nation,  discussion  concerning  it  was 
inactive ;  l)ut  ^vith  the  rapid  decrease  of  the  debt 
the  necessitous  features  began  to  disappear.  Mean- 
while, the  immense  growth  of  the  protected  interests 
and  the  immense  and  imnecessary  revenues  resulting 
from  the  tariff  left  the  protectionist  with  constantly 
diminishing  reasons  or  even  pretexts  for  the  contin- 
uance of  the  policy.     Among  the  most  prominent  of 


PROTECTION  229 

the  few  remaining  pretexts  is  "  that  it  is  essential  to 
a  state  of  things  where  great  interests  have  grown 
up,  and  whose  injury  would  be  that  of  the  commu- 
nity at  large,  that  tlie  existing  conditions  shall 
continue."  The  paraphrase  of  this  may  thus  be 
stated  :  The  condition  of  protection  has  stimulated 
certain  branches  of  industry,  and  this  stimulus  has 
given  unequal  private  gains  to  those  who  have  been 
assisted  by  the  government.  Now,  because  they 
have  made  such  unequal  gains,  the  unwholesome 
policy  by  which  they  have  been  enabled  to  acquire 
them  shall  be  allowed  to  continue,  in  order  that  they 
may  preserve  and  increase  them ;  and  this  abuse  is 
to  become  a  principle  of  government. 

Whatever  circumstances  there  may  have  been  in 
the  early  history  of  our  country  to  suggest  the 
theory  of  protection  on  the  grounds  of  expediency, 
time  and  change  have  overcome.  In  the  place  of 
industries  which  were  once  infant,  there  now  exist 
fully  grown  but  still  artificially  stimulated  industries. 
These  indeed  have  outgrown  the  market,  or  rather 
the  market  has  been  limited  by  the  very  policy 
which  created  them.  We  have  a  condition  in  which 
one  class  of  industries  is  congested  by  stimulus  and 
another  paralyzed  by  exaction,  in  which  artifices  are 
now  invoked  to  continue  the  stimulus  and  appro- 
priate the  fruits  of  it.  Thus  we  are  face  to  face 
with  an  immense  problem  resulting  from  violated 
economic  principles. 

Nothing  could  be  more  insidious  than  the  influ- 


230  INDUSTRIAL   LIBERTY 

ence  of  protection  as  a  gradual  means  of  mis-educa- 
tion. In  its  incipient  stages  it  was  not  thouglit 
of  by  its  leading  advocates  as  anything  but  an 
expedient  which  needed  temporary  assistance.  At 
present  there  has  come  to  be  assumed  for  it  per- 
manency as  a  principle.  The  conclusion  wliicli 
prevails  with  many  that  it  is  such  a  principle,  seems 
to  them  to  be  a  logical  conclusion.  Men  who  are 
easily  convinced  that  protection  had  its  first  exist- 
ence as  a  matter  of  right,  who  are  ready  to  attribute 
to  it  all  of  the  material  development  of  our  countr}'', 
and  who  especially  ascribe  to  it  all  of  the  material 
progress  ^vhich  has  been  made  since  the  war,  find 
the  argument  for  its  first  institution  overwhelming. 
The  statement  of  the  case  is  its  proof.  To  them  it 
is  plain  that  because  we  had  ample  quantities  of  iron 
and  coal  within  our  mountains,  and  laborers  who 
might  be  employed  to  bring  these  into  industrial 
use ;  that  because  this  coal  and  iron  remained  un- 
touched on  account  of  the  cheapness  of  labor  in  the 
older  civilizations,  which  enabled  them  to  furnish 
the  product  to  us  at  cheaper  prices,  therefore  it 
was  the  duty  of  the  government,  through  a  protec- 
tive tariff,  to  bring  about  industrial  development. 
To  them  this  protection  seemed  to  promise  every- 
thing, to  deny  nothing.  They  do  not  find  it  difficult, 
therefore,  to  conclude  that  the  system  by  ^vhich  this 
result  is  produced  is  founded  on  a  principle. 

Beside  these  devotees  there  are  many  whose  gen- 
eral feelings  rather  tend  in  the  direction  of  free  trade, 


PROTECTION  231 

but  wlio  look  upon  this  kind  of  logic  as  puzzling  and 
very  difficult  to  answer.  It  seems  to  them  an  inex- 
plicable thing,  that  reasons  which  appeared  so  un- 
answerable for  justifying  the  assistance  of  the  gov- 
ernment at  first,  should  produce  the  consequences 
from  which  we  are  now  suffering.  Those  of  us  who 
reason  thus  need  to  call  to  our  minds  that  it  is  eco- 
nomic and  political  principles  which  we  are  consid- 
ering ;  that  the  violation  of  these  principles  began 
Avith  the  first  act  of  fostering ;  that,  however  beguil- 
ing the  pretext,  the  vice  is  inherent  in  the  system. 
The  concession  first  made  as  a  temporary  expedient 
ought  not  to  have  been  made.  Nowhere  in  its  pro- 
gress has  it  changed  from  a  theory  to  a  principle. 
In  this  view  there  is  nothing  which  characterizes  the 
infatuation  of  the  protectionist  more  than  the  kind 
of  reasoning  which  he  employs  for  its  support.  It 
is  little  less  than  a  political  solecism,  that  this  theory 
is  thus  set  forth  as  a  principle  just  at  the  time  when 
its  fallacy  as  a  theory  is  becoming  irresistible,  not  so 
much  through  logical  examination  as  through  the 
magnitude  of  the  resulting  evils. 

When  we  examine  protection  by  its  present  conse- 
(|uences,  we  find  the  fact,  which  can  be  neither  evaded 
nor  denied  by  the  protectionists,  that  the  fostering 
hand  of  the  government  has  accomplished  one  defi- 
nite result,  and  that  the  protectionists  are  proceeding, 
out  of  the  condition  thus  produced,  to  accomplish 
another.  That  which  the  government  has  thus  ac- 
complished is,  that  it  has  restricted  the  area  of  the 


232  INDUSTRIAL   LIBERTY 

market  by  artificially  stimulating  tlie  fostered 
trades  and  tlius  created  for  tliese  industries  an 
excess  of  production.  That  which  the  protectionists 
are  seeking  to  accomplish  is  the  preservation  and 
continuance  of  the  fruits  of  this  system,  and  at  the 
same  time  the  repression  of  the  growth  of  the  in- 
dustries. There  is  no  evidence  that  the  protectionists 
have  shown  a  disposition  to  seek  a  solution  of  the 
problem  thi-ough  a  discussion  of  principles,  by  any 
candid  recognition  of  the  effects  of  over-production, 
or  by  steps  of  any  kind  which  indicate  a  disposition 
for  reform.  They  rather  sought  to  suppress  discus- 
sion, until  it  was  forced  upon  them.  As  they  have 
lately  begun  to  realize  that  there  is  a  party  in  this 
country  which  is  becoming  more  and  more  cohesive 
and  which  is  determined  on  a  change,  they  have 
suddenly  come  to  claim  that  if  reform  is  to  be  under- 
taken it  should  be  conducted  by  its  friends,  meaning 
themselves,  and  not  by  its  enemies,  meaning  those 
who  are  opposed  to  the  policy  which  had  produced 
the  evils  to  be  reformed. 

But  apart  from  the  manner  of  discussion  which 
the  protectionists  thus  pressed  have  adopted,  the 
practical  means  by  which  they  have  been  and  are 
attempting  to  deal  with  the  dilemma  of  over-produc- 
tion are  only  of  a  character  which  tends  to  produce 
for  them  another  dilemma.  These  means  consist  of 
artifices  auxiliary  to  existing  protection,  which  are 
mainly  of  two  kinds,  and  which,  although  differently 
designaied,  are  in  their  operation  and  influence  prac- 


PROTECTION  233 

tically  the  same.  The  first  of  these  consists  of  secret 
associations  of  manufacturers  and  of  employees,  and 
the  second,  of  the  "  trust."  The  iron  and  steel  manu- 
facturers, for  instance,  have  a  large  secret  association 
whicli  meets  from  time  to  time  for  the  purpose  of 
"  fixing  the  scale  of  prices,"  and  incidentally  of  influ- 
encing the  wages  of  the  employees.  To  counteract 
the  influence  of  this  association  so  far  as  wages  are 
concerned,  the  employees  have  their  secret  associa- 
tions for  the  maintenance  or  increase  of  their  wages. 
The  chief  purpose  of  the  manufacturers'  association 
is  to  limit  the  production  within  the  needs  of  the  re- 
stricted market,  in  order  to  sustain  the  prices  of  the 
product.  The  other  artifice,  "  the  trust,"  substantially, 
as  I  have  said,  the  same  in  its  influence,  is  in  much 
more  general  use. 

Illegitimate  as  these  organizations  are  in  the  in- 
dustrial field,  their  existence  there  is  by  no  means 
illogical ;  they  fall  in  lineal  sequence  w^ith  the  condi- 
tion which  protection  has  created.  The  interference 
with  natural  law  which  legislation  has  established 
renders  necessary  the  introduction  of  further  interfer- 
ences ;  and  it  is  this  office  that  these  organizations 
fulfil.  The  effect  of  the  "  trust  "  is  to  limit  the  foster- 
ino;  character  of  the  tariff.  With  it  in  command  even 
the  assumption  of  fostering  is  overcome,  because  it 
prevents  the  possibility  of  fostering  through  its 
control  of  the  industry  for  the  specific  purpose  of 
limitation.  Under  the  domination  of  the  "trust," 
thei'efore,  the  government's  relation  is  entirely  meta- 


234  INDUSTRIAL   LIBERTY 

morphosed.  It  becomes  a  contributor  of  an  indirect 
premium  to  an  artifice  for  the  restraint  of  industry ; 
and  so  protection  instead  of  fostering  industry  comes 
to  be  a  fosterer  of  monopolies  and  "  trusts."  Noth- 
ing can  better  illustrate  the  predominance  in  the 
mind  of  the  protectionist  of  the  motive  of  private 
gain  over  the  pretended  motive  of  public  welfare, 
than  the  establishment  of  this  auxiliary  machinery ; 
for  taking  those  laws  which  are  miscalled  protec- 
tive, tosrether  with  these  secret  associations  and 
"  trusts,"  they  constitute  a  system  for  the  promotion 
of  scarcit}^  and  for  the  prevention  of  abundance, 
thus  thoi'oughly  subordinating  the  assumed  public 
welfare  to  private  emolument. 

For  measuring  the  theory  of  protection  exactly  by 
the  standard  of  equal  political  right,  we  may  assume 
that  the  typical  freeman  in  whose  mind  the  thought 
of  this  equal  right  is  dominant,  and  who  has  a  Just 
sense  of  his  own  duty  and  the  duty  of  others  in 
furtherance  of  this  right,  will  claim  this  freedom  as 
superior  to  the  support  of  another's  industry.  He 
will  insist  that  there  cannot  exist  in  the  government 
any  right  to  require  any  contribution  of  the  fruits 
of  his  industry  for  the  encouragement  of  the  private 
enterprise  of  others ;  that  any  assumption  that  such 
enforced  contribution  is  to  his  general  advantage 
can  afford  no  just  waiTant  for  the  exaction.  When 
this  citizen  is  challenged  as  a  theorist,  as  he  doubt- 
less will  be,  he  may  ask  that  the  theory  and  the 
practice  involved  in  the  question  be  judged  in  ac- 


PROTECTION  235 

cordance  with  the  law  of  e(][ual  liberty,  in  order  to 
determine  whether  he  be  less  practical  than  his  chal- 
lenger. The  appeal  to  his  prejudice  against  foreign 
nations  will  not  justify  his  surrender  of  equal  poli- 
tical right  to  support  such  prejudice.  It  there- 
fore will  not  move  him,  since  he  will  realize  that 
deference  to  such  a  prejudice  will  only  render  his 
citizenship  less  secure,  and  will  only  make  his 
government  less  free.  Nor  can  the  phenomenal 
growth  of  industry,  nor  the  sum  of  the  protected 
industries  appear  to  him  to  offer  any  sounder  rea- 
son for  the  protective  policy,  since  it  does  not 
seem  to  him  to  be  the  purpose  of  civilization  to 
exhaust  nature's  resources  most  speedily.  The  na- 
tion's real  wealth  and  greatness  is  not  determined 
exclusively  by  its  gains,  and  not  at  all  by  the  mis- 
distribution  of  its  gains.  It  is  not  the  annual  amount 
of  wood-pulp  or  paper  or  iron  produced  which  makes 
the  nation  great  as  a  free  government,  nor  the  rapid- 
ity with  which  it  can  disforest  vast  areas  of  land. 

To  this  typical  freeman  there  is  but  one  legitimate 
purpose  for  the  assessment  and  collection  of  taxes 
in  a  free  government,  and  that  is,  for  providing  the 
necessary  expenses  of  that  government  economically 
administered.  He  infers  from  the  immense  accumu- 
lations of  the  stimulated  manufacturer  and  the  de- 
creasing returns  of  the  farmer,  that  the  indirect 
contribution  from  the  farmer  is  by  further  diver- 
sion appropriated  by  the  manufacturer,  and  that 
this  is  more  for  assistance  to  private  enterprise  than 


236  INDUSTRIAL    LIBERTY 

for  the  promotion  of  wholesome  public  growth  ;  and 
he  sees  in  the  "trusts"  and  the  secret  associations 
nothing  but  artifices  to  support  this  inequality. 
If  during  the  war  he  admitted  the  Justice  of  the 
exactions  from  his  labor,  for  the  support  of  the  State, 
his  admission  came  from  the  belief  that  the  war  was 
waged  for  the  maintenance  of  his  equal  right ;  that 
he  therefore  is  entitled  to  the  fruits  of  that  war. 
Nor  will  the  pretence  of  preserving  and  maintain- 
ing high  wages  to  the  mechanic  appear  to  this  citizen 
as  anything  but  a  delusion.  He  knows  that  whilst  it 
may  be  that  some  mechanics  in  special  industries 
may  temporarily  receive  higher  wages  through  arti- 
ficial restrictions,  the  majority  of  laborers  are  not  and 
cannot  be  benefited.  He  realizes  that  the  inexorable 
law  of  nature  is  that  which  produces  justice  to  the 
producer,  the  wage-earner,  and  the  consumer  alike. 
In  its  normal  operation  it  provides  that  the  character 
of  the  service  to  the  consumer  shall  tend  toward  im- 
provement. It  is  this  law  that  transcends  all  arti- 
fices. In  his  view  nature  says  to  everyone  engaged 
in  the  manufacturing  industry : 

"  While  your  margin  of  profits  upon  the  specific 
items  of  your  product  shall  tend  to  decrease,  the 
growth  in  the  volume  of  your  business  shall  tend 
thereby  to  increase,  thus  to  enlarge  the  sum  of  your 
profits  and  insure  your  efificient  service  to  the  con- 
sumer. That  w^hich,  in  the  earliest  stages  of  your 
art,  you  manufacture  crudely,  imperfectly,  in  small 
quantity,  and  at  high  cost,  you  shall,  as  your  art  ad- 


PROTECTION  237 

vances,  manufacture  with  more  skill,  in  larger  quan- 
tity, at  cheaper  cost,  and  thereby  better  serve  the 
consumer.  The  progressive  compensation  which 
you  shall  receive  in  your  process  of  cheapening, 
shall  be  that  whicli  growls  out  of  your  progressive 
capacity  to  increase  the  volume  of  your  product  and  to 
improve  its  quality.  The  direct  compensation  which 
shall  come  to  the  laborer  engaged  in  your  employ 
by  this  progression  shall  be  that  which  results  from 
his  ability  to  sustain  or  increase  his  w^ages  by  reason 
of  his  improved  skill  to  accomplish  so  much  more, 
so  much  better,  in  a  given  time  than  he  did  in  the 
earlier  sta2:es  of  the  art.  And  besides  this  his  indirect 
compensation  wdll  be  that  which  w-ill  result  in  the 
cheapening  of  other  products  w^hich  he  will  use  as  a 
consumer — or  in  other  words,  in  the  higher  purchas- 
ing power  of  his  wages." 

This  is  a  law^  of  political  economy  governing  in- 
dustry and  tending  towards  growth  and  improve- 
ment. It  is  a  law  by  which  the  wage-earner,  the 
consumer,  and  the  manufacturer  are  alike  protected. 
It  is  a  law^  of  supreme  justice  in  industry,  and  any 
tampering  wdth  the  relations  between  either  the 
consumer,  the  producer,  or  the  wage-earner,  which 
tends  to  disturb  its  operation,  disturbs  normal 
gi'owth  and  works  inevitable  injustice.  Moreover, 
this  law  is  persistent.  The  attempts  of  the  me- 
chanic to  fix  his  w^ages  by  combination,  under  the 
delusion  that  his  wages  may  be  permanently  sup- 
ported, or  under  that  other  delusion  that  the  appli- 


238  INDUSTRIAL  LIBERTY 

ance  of  new  inventions  shall  be  excluded,  or  under  tlie 
still  larger  delusion  of  protection,  do  not  annihilate 
the  law.  In  the  general  operation  of  this  law,  the  pro- 
gress of  industry  is  characterized  by  the  ever-increas- 
ing volume  of  the  product  and  the  diffusion  of  that 
product,  and  the  enlarged  consumption  is  induced 
by  the  gradual  cheapening  to  the  consumer.  No  loss 
is  entailed  either  upon  the  producer,  the  wage-earner, 
or  the  consumer  ;  it  operates  equally  for  the  advan- 
tage of  each,  and  thus  the  largest  diffusion  of  the 
fruits  of  industry  is  secured  to  the  human  race. 

This  law  does  not  exist  for  one  locality  or  for  one 
people  ;  it  prevails  over  the  world.  Nature  condemns 
any  attempt  on  the  part  of  any  one  people  to  appro- 
priate the  fruits  of  industry  in  disobedience  to  it. 
The  penalties  for  such  disobedience  may  not  be  im- 
mediately perceptible.  The  direct  material  fruits  of 
violation  may  indeed  be  great  and  the  penalties  may 
be  postponed.  Nevertheless,  in  proportion  as  a 
people  are  powerful  enough  and  have  extent  of  ter- 
ritory enough  to  enable  them  to  interfere,  and  do  so 
interfere,  with  the  operation  of  this  la^v,  just  in  pro- 
portion to  the  strength  of  the  organized  interference 
will  be  the  final  untoward  results  to  that  people ;  and 
if  we  will  but  trace  the  results  of  disobedience,  we 
shall  find  that  the  exacted  penalty  overcomes  any 
assumed  beneficence, — any  immediate  or  temporary 
advantages  which  ai'e  acquired  through  such  inter- 
ference. 

There  is  no  possible  means  by  which  a  policy  of 


PROTECTION  239 

fostering  class-interests  can  be  raised  into  a  principle 
wliicli  sliall  fall  into  accord  with  free  government. 
The  antagonism  between  the  two  is  inherent.  The 
theory,  therefore,  of  protection  is  false,  and  does  not 
in  any  way  fit  the  quality  of  trne  liberty ;  nor  can 
it  be  made  to  fit  it.  It  is  thus  that  the  typical 
American  freeman  may  be  expected  to  view  the 
subject. 

It  is  quite  likely  that  no  argument  which  looks  to 
ultimate  ends  will  have  much  influence  on  minds 
that  are  bent  on  immediate  physical  results.  Most 
men  are  ready  to  sacrifice  remote  for  temporary 
advantages.  Nevertheless,  when  we  consider  the 
ultimate  basis  of  human  freedom,  it  is  necessary  that 
we  should  look  as  far  into  the  future  as  possible. 

There  is  a  considerable  class  who  favor  tariff  re- 
form, and  yet  condemn  free  ti'ade  as  theoretical  and 
Utopian.  But  between  this  class  of  reformers  and 
the  protectionists  themselves  it  is  not  a  question 
whether  real  political  liberty  shall  prevail,  but  what 
degree  of  inequality  may  be  allowed  to  exist  and 
continue  from  motives  of  temporary  expediency. 

Another  class  of  reformers  who  express  faith  in 
the  ultimate  freedom  of  trade,  assume  that  in  exist- 
ing conditions  it  is  imprudent  even  to  advocate  such 
reform.  But  it  seems  to  me  that  there  can  be  no 
political  or  industrial  conditions  in  which  the  under- 
lying principles  should  not  be  studied  with  a  view 
to  their  final  establishment,  and  with  a  view  of 
creating  a  present  basis  of  adjustment. 


240  INDUSTRIAL   LIBERTY 

■-  Tliere  is  still  another  class,  composed  mainly  of 
politicians,  wlio  indulge  in  tlie  pretence  that  in  tariff 
reform  the  stimulated  interests  which  have  gro\\Ti 
up  will  not  be  seriously  affected  by  a  return  to  free- 
dom of  trade.  This  class  have  only  adoj)ted  one  of  the 
methods  of  the  protectionists — that  of  prophesying 
pleasant  things  ;  but  for  my  part,  I  have  no  faith  in 
the  power  of  pretence  in  the  discussion  of  economic 
science.  Transition  from  a  wrong  policy  to  a  right 
one  will  involve  inevitable  disturbance,  proportioned 
to  the  extent  of  the  structures  which  have  gro^vn  up 
under  the  wrong  policy.  The  o^\^lers  of  the  pro- 
tected interests  have  learned  to  lean  upon  the  support 
which  they  have  received.  Some  of  their  interests 
possess  abnormal  vitality  through  this  assistance, 
and,  of  course,  the  first  effect  of  removal  Avill  be 
severely  felt.  The  props  upon  which  they  exist  being 
taken  away,  not  only  will  their  industries  themselves 
be  interrupted,  but  collateral  dependencies  will  be 
disturbed.  The  most,  therefore,  that  the  honest 
reformer  can  promise  to  the  protectionist  is  that  the 
reform  may  be  made  upon  the  line  of  safe  change, 
so  as  to  afford  to  the  protectionist  a  reasonable  time 
for  the  transfer  of  his  reliance  upon  artificial  privi- 
leges to  self-dependence,  with  the  assurance  that 
after  the  transfer  is  effected  and  his  industries  ad- 
justed to  that  transfer,  they  will  exist  in  the  natural 
order  of  things  for  cheapening  the  product  to  the 
consumer  and  creating  an  enlargement  of  his  market 
to  the  world. 


PROTECTION  241 

As  I  suggested  at  tlie  beginning  of  this  chapter, 
my  purpose  in  discussing  the  subject  of  protection 
is  not  so  much  to  deal  with  any  of  the  immediate 
details,  as  to  indicate  that  foundation  upon  which 
reform  should  rest.  Whilst  it  may  be,  as  I  have 
heretofore  said  with  reference  to  the  railway  prob- 
lem, a  question  of  policy  as  to  how  this  reform 
shall  be  begun  and  accomplished,  it  cannot  be  a 
question  of  policy  as  to  w^hether  we  shall  return  to 
those  conditions  contemplated  by  the  Constitution, 
Just  how  the  reform  shall  be  begun,  at  what  rate 
it  shall  progress,  w^hat  degree  of  consideration 
should  be  shown  to  existing  protected  structures, 
are  questions  of  political  policy ;  but  the  questions 
whether  it  shall  be  bes^un.  and  what  shall  be  its 
ultimate  aims,  are  questions  of  political  and  industrial 
liberty. 

IIoAvever  far  we  have  drifted  from  the  law  of 
equal  right,  we  are  not  beyond  retracing  our  steps, 
although  it  is  doubtless  the  case  that  the  very  dis- 
tance which  we  have  travelled  is  one  of  the  causes 
which  will  prevent  us  from  realizing  the  extent  of  the 
departure  until  the  penalties  of  that  departure  begin 
to  be  seriously  felt.  The  evils  have  grown  insidiously. 
Their  supporters  have  organized  them  and  fortified 
their  growth.  They  aim  to  give  to  a  public  discussion 
of  the  subject  that  indefiniteness  which  tends  to 
impart  to  it  a  degree  of  haziness.  They  have  suc- 
ceeded in  selecting  the  field  for  contest.  They  deal 
with  statistics  of  growth — immediate  results.     If  Ave 


242  INDUSTRIAL   LIBERTY 

can  turn  our  attention  from  these  immediate  results 
to  the  principles  Avhich  lie  beneath  them  we  will 
find  these  principles  neither  complex  nor  difficult  to 
comprehend.  So  far  as  the  conditions  are  concerned, 
which  lie  between  us  and  the  goal  to  which  we 
should  direct  our  steps,  there  are  the  barriers  of 
vast  pecuniary  accumulation,  of  false  reasoning, 
and  legislative  enactments  to  support  it,  and  even, 
it  may  be  said,  of  an  organic  law  in  which  the  ul- 
timate conception  of  industrial  liberty  is  not  fully 
defined. 

The  first  question,  therefore,  which  we  have  to 
ask  ourselves  is  :  Is  the  support  of  a  special  private 
interest,  through  exaction  from  the  general  tax- 
payer, within  the  province  and  power  of  a  republi- 
can government  ?  If  we  answer  this  question  in 
the  negative,  there  remains  only  the  considera- 
tion of  the  policy  to  be  pursued  as  to  the  rate 
at  which  the  withdrawal  of  that  power  shall  take 
place. 

It  is  not  within  the  scope  of  this  Avoi'k  to  attempt 
any  discussion  of  the  complicated  question  involving 
the  principles  of  taxation ;  I  will  therefore  only 
briefly  refer  to  this  subject  in  its  relation  to  the 
tariff.  The  science  of  taxation  was  not  extensively 
studied  in  the  discussions  which  preceded  and  fol- 
lowed the  formation  of  the  Constitution.  The  con- 
dition of  the  nation  was  not  then  conducive  to  such 
a  study.  The  Kevolutionary  A¥ar  seemed  to  make 
any  means  justifiable  for  i-aising  revenues,  and  the 


PROTECTION  243 

system  by  wliicli  they  were  to  be  raised  did  not 
therefore  challenge  great  examination.^ 

The  present  method  of  indirect  taxation  is  so 
deeply  imbedded  in  our  system  of  government,  and 
is  so  strongly  supported  by  a  sense  of  convenience, 
that  in  all  probability  it  will  not  soon  be  eradicated. 
It  is  impossible,  however,  to  consider  the  evil  con- 
sequences resulting  from  })rotection,  without  regard- 
ino;  the  indirect  method  of  raisins;  revenue  as  in  a 
large  measure  a  promoter  of  these  consequences.  The 
subject  of  taxation  is  one  which  is  exceedingly  diffi- 
cult to  deal  with,  for,  as  Washington  said  in  his 
Farewell  Address,  "  No  taxes  could  be  devised  which 
are  not  more  or  less  inconvenient  and  unpleasant." 
It  must  be  confessed  that  on  the  score  of  convenience, 
leaving  out  ultimate  consequences,  the  indirect  tax 
is  the  less  unpleasant  of  the  two.  Whatever  incon- 
venience or  unpleasantness  there  may  be  about  the 
direct  system  of  taxation,  however,  it  is  hardly  pos- 
sible that  with  it  there  could  have  existed  the  desrree 
of  protection  which  has  prevailed  since  the  war.  No 
promise  of  indirect  and  indefinite  benefits  to  the 
community  at  large  would  have  induced  a  general 
acquiescence  in  the  exactions  which  have  been  made 
by  the  government  for  the  stimulation  of  the  pro- 
tected industries.    Whilst  these  exactions  do  not  ap- 

*  Indirect  taxation  is  referred  to  only  twice  in  the  Federalist,  and  then 
by  Hamilton  (Nos.  21  and  34).  In  the  debates  on  the  framing  of  the  Con- 
stitution, contained  in  the  Madison  Papers,  Wilson  appears  to  have  been 
the  only  one  who  gave  the  subject  any  attention  at  all.  (Vol.  I.,  pp.  282 
and  3S6.)  All  that  was  said  concerning  it  was  in  its  favor,  founded  upon 
its  convenience.  Jefferson  while  President  of  the  United  States  favors 
it  for  this  reason.     (See  Jefferson's  Works,  vol.  III.,  pp.  261,  461.) 


244  INDUSTRIAL   LIBERTY 

pear  upon  the  laborer's  score,  they  are  therefore 
likely  to  be  larger,  since  because  they  are  indirect 
and  unperceived  they  easily  grow.  Thence,  in  the 
protected  industries,  their  proceeds  go  through 
secret  cliannels,  partly  to  be  absorbed  in  the 
clumsy  machinery  of  collection,  partly  to  swell  the 
account  of  the  coi'porate  manager,  and  partly  to 
inflate  the  sum  of  the  manufacturer's  gains.  From 
the  accumulations  so  made  they  often  furnish  those 
contributions  which  go  to  influence  legislation,  in 
order  to  perpetuate  and  enlarge  the  channels  of 
divei'siou.  Did  the  farmer  realize  this  process  and 
result,  it  must  be  obvious  that  the  tax-gatherer  could 
not  make  an  argument  strong  enough  to  induce  him 
patiently  to  submit  to  the  exactions. 

If  the  indirect  system  of  taxation  is  cumbersome 
and  costly  in  dollars  and  cents,  a  far  greater  reason 
against  it  exists  in  its  consequences.  One  of  these  is 
exhibited  in  the  dan2:ers  which  have  resulted  from 
this  system  in  producing  an  unprecedented  surplus 
in  the  treasury  of  the  nation.  An  immense  sum  of 
money  collected,  presumably  for  the  administration 
of  the  government,  is  in  excess  of  its  needs.  This 
sum  it  is  impossible  by  any  process  to  return  to  the 
specific  sources  from  which  it  came.  Even  were 
it  possible  to  reach  those  from  ^vhom  it  was  ex- 
acted, Avhen  we  consider  the  cumbrous  and  expen- 
sive manner  of  its  return,  a  large  part  of  the  amount 
collected  would  be  dissipated  in  the  process  of  col- 
lection and  return.     The  very  existence  of  this  sur- 


PROTECTION  245 

plus  tends  to  turn  tlie  mind  of  nearly  every  citizen 
towards  tliouglits  of  its  appropriation.  It  appeals 
to  tlie  imagination  and  to  tbe  cupidity  of  classes, 
and  especially  of  those  classes  who  seek  a  compensa- 
tion that  they  do  not  earn.  It  stimulates  utopian 
enterprises,  and  suggests  visionary  legislation  for 
philanthropic  objects.  The  socialist  fancies  it  to  be 
a  realization  of  that  fictitious  hoard  lying,  as  Mr.  Mill 
says,  in  an  imaginary  strong  box  supposed  to  con- 
tain all  lunnan  wealth. 

A  contrast  of  the  conditions  which  prevailed  imme- 
diately after  the  war  with  those  which  exist  to-day, 
will  also  help  us  to  realize  the  baneful  influence  of 
this  surplus.  At  the  close  of  the  war  we  found  our- 
selves poor.  Then  our  activities  were  thoroughly 
aroused,  stimulated  by  the  very  debt  which  the  war 
entailed.  We  realized  the  necessity  for  the  payment 
of  this  debt  to  the  fullest  extent  of  its  obligation, 
and  it  was  only  when  the  fact  became  apparent  that 
these  activities  were  producing  the  means  of  rapid 
payment,  and  also  a  surplus,  that  the  enthusiastic 
statesmen  made  the  suggestions  for  its  appropriation. 
Out  of  tliis  condition  have  arisen  not  only  these 
suggestions,  but  also  the  avid  disposition  of  the 
politician  to  dissipate  the  surplus  in  local  appro- 
priations, and  a  like  disposition  of  some  of  the  repre- 
sentatives of  the  people  to  barter  assistance  to  one 
locality  in  exchange  for  assistance  to  another. 

Viewing  industrial  liberty  in  its  comprehensive 
sense  as  importing  the  equal  political  right  of  the 


246  INDUSTRIAL   LIBERTY 

citizen,  a  democratic  government  fails  to  fulfil  its 
true  functions  whenever  it  exacts  taxes  from  a  citi- 
zen or  class  of  citizens,  eitlier  directly  or  indirectly, 
witli  the  purpose  of  supporting  the  private  industry 
of  another  citizen  or  class  of  citizens.  The  assumed 
purpose  of  promoting  the  general  prosperity  does 
not  thereby  mitigate  the  evil.  The  supreme  rule 
of  a  democratic  government  with  reference  to  taxa- 
tion is  that  the  exaction  from  the  citizens  must  be 
limited  to  the  needs  of  the  government  economically 
administered ;  that  any  exaction  beyond  this,  from 
whatever  pretext  of  public  policy,  is  an  infringe- 
ment upon  democratic  freedom. 

In  America  the  great  burden  of  this  system  falls 
upon  the  hitherto  unconscious  farmer.  He  belongs 
to  a  class  which  is  the  first  in  number  and  economic 
importance  in  the  country.  I  do  not  regard  this 
numerical  superiority  as  of  particular  consequence 
in  the  consideration  of  a  principle  of  equal  justice, 
since  the  farming  class  would  be  entitled  to  equal 
political  right  were  it  one  tenth  as  large  or  had 
one  tenth  its  value.  It  is  not  under  the  theory 
of  "the  greatest  good  to  the  greatest  number," 
but  upon  the  better  principle  of  justice  to  all  that 
his  right  is  due  him.  I  merely  state  his  numerical 
strength  as  a  fact,  to  indicate  how  necessary  this 
class  is  to  the  countr}\  The  burden  thus  falls  at 
last  upon  the  farmer.  With  him  there  is  no  combi- 
nation or  monopoly ;  he  is  confronted  \\ith  the 
necessity  of  selling  to  the  Avorld  on  a  purely  com- 


PROTECTION  247 

petitive  basis.  Little  as  he  has  hitherto  realized  it, 
his  burden  is  gradually  growing  heavier.  One  has 
but  to  look  at  the  advertisements  of  the  Eastern 
papers,  and  particularly  the  religious  papers,  to  learn 
how  great  a  number  of  organizations  in  our  cities  are 
engaged  in  the  special  purpose  of  placing  mortgages 
all  over  the  AVest,  upon  farms,  at  almost  double,  and 
in  some  cases  quite  double,  the  rates  of  interest  pre- 
vailing in  the  region  of  the  protected  industries.  As 
a  consequence  the  farmer  is  becoming  overloaded 
with  the  burden.  Any  profit  which  normally 
comes  from  the  increase  of  the  value  of  land  in  a 
new  country,  or  from  the  exercise  of  skill  and  labor 
under  normal  conditions,  is  largely  abstracted  by 
the  corporation  and  its  ally,  the  protective  tariff. 
To  the  farmer  there  can  be  no  unearned  increment 
in  increasing  values  :  the  process  of  artificial  and  in- 
direct abstraction  for  the  favored  class  is  too  system- 
atic to  j)ermit  this.  The  normal  increment  to  which 
he  would  be  entitled,  having  been  taken  from  him 
by  indirect  abstraction,  is  in  part  loaned  back  to  him 
and  becomes  a  mortgage  on  his  farm.  He  bears  his 
burden  in  a  way  which  would  be  heroic  if  he  were 
not  unconscious  of  its  cause. 

Those  who  have  come  as  emigrants  from  Europe 
to  the  AVest  fall  under  the  same  conditions.  Induced 
by  cheap  rates  of  passage,  they  bring  their  families 
and  their  little  store  to  some  destination  in  the  West, 
where,  further  beguiled  by  the  cheap  prices,  they 
purchase  land.     And  here,  under  the  pretences  of 


248  INDUSTRIAL    LIBERTY 

freedom  which  are  held  out  to  them,  they  begin 
to  pursue  their  industries,  and  gradually  to  feel 
the  results,  of  which  they  have  not  yet  intelligently 
learned  the  causes — that  the  new  burdens  begin 
with  their  settlement.  At  first  the  railway  exercises 
a  far  more  complete  control  over  their  goings  and 
comings  than  the  government.  It  affords  them 
transportation,  but  surcharges  this  convenience  by 
burdens  which  are  only  limited  by  their  ability  to 
bear  them  ;  in  addition  to  this  the  tariff  .indirectly 
charges  their  labor  with  the  support  of  other  in- 
dustries, thus  adding  to  their  burdens.  After  a  few 
years  there  comes  the  necessity  of  mortgaging, 
and  even  if  it  happens  that  through  the  bounty 
of  nature  and  the  exercise  of  skill  the  emig-rants 
are  able  to  make  more  than  is  necessary  to  meet 
the  burden  of  their  exactions,  the  conditions  under 
which  they  live  are  not  those  of  freedom.  There 
is  imposed  upon  them  a  double  burden,  not  for  the 
support  of  the  government,  but  for  the  support  of 
the  corporate  power  and  of  the  manufacturing  power. 
Nor  is  the  common  laborer  any  better  off.  AVhilst 
it  may  be  that  there  are  some  mechanics,  skilled  or 
unskilled,  directly  necessary  to  the  protected  inter- 
ests who  get  some  of  the  droppings  of  protection, 
which  temporarily  increase  their  wages,  and  who  thus 
fancy  themselves  permanently  benefited,  yet  the 
vast  majority  of  laborers  are  only  under  its  oppres- 
sive influence.  The  farmer  and  the  laborer  have  not 
hitherto  seemed  to  realize  the  cause  of  their  indirect 


PR  O  TECTION  249 

burdens.  This  kind  of  blindness  is  not  by  any 
means  uncommon,  it  is  owing  to  what  may  be  called 
a  general  mental  law.  It  has  often  been  pointed 
out,  as  characteristic  of  the  mass  of  men  that  they  are 
little  able  to  conceive  a  genei'al  law  apart  from  the 
particular  application  of  it  with  which  they  are 
familiar ;  just  as  they  cannot  disassociate  the  general 
term  or  maxim  from  the  special  examples  which 
meet  them  in  daily  experience.  As  Emerson  aptly 
puts  it,  "Most  men  do  not  realize  a  principle  except 
as  its  light  falls  upon  a  fact."  Thus  the  farmer  and 
laborer  will  attribute  their  misfortunes  to  some  in- 
scrutable law  of  nature,  rather  than  to  a  law  enacted 
at  Washington  which  practically  forbids  ocean  ves- 
sels supplying  them  with  their  needs,  or  to  that 
other  law,  enacted  in  the  railway  office  at  New  York, 
that  mercilessly  taxes  the  product  which  they  seek 
to  deliver  to  their  consumers.  It  is  the  indirectness 
of  the  burdens  which  has  thus  made  their  real  cause 
unperceived. 

The  protectionist,  dealing  with  immediate  mate- 
rial results,  ignoring  fundamental  causes  and  final 
results,  only  darkens  counsel  and  conceals  principle 
with  figures  and  words.  I  believe  that  sound  politi- 
cal economy  is  identical  with  sound  political  ethics, 
and  that  the  application  of  these  principles  to  the 
question  comports  with  humanity  and  justice ;  that 
when  the  ethical  side  of  the  subject  comes  to  be 
heard,  studied,  and  understood,  when  the  sense  of 
right   comes  to    be   appealed    to    rather   than  the 


250  INDUSTRIAL   LIBERTY 

pocket,  there  will  be  a  clearer  perception  of  the 
question.  When  man's  avarice  and  cupidity  are 
uppermost  he  naturall}^  resorts  to  compromises  and 
expedients.  In  this  frame  of  mind  he  is  apt  to  mag- 
nify the  importance  of  immediate  results,  and  cor- 
respondingly to  underrate  the  importance  of  those 
which  are  more  remote.  Industrial  emancipation 
can  never  be  secured  merely  through  measurement 
by  dollars  and  cents;  it  is  only  when  a  sense  of 
Justice  is  aroused  and  becomes  active  that  we  realize 
the  necessity  of  equal  individual  right  as  the  only 
basis  for  wholesome  industry  and  permanent  liberty. 
When  we  come  therefore  to  understand  thoroughly 
that  there  is  involved  in  the  question  of  protection 
the  alternative  of  freedom  or  slaver}^ — not  merely 
slavery  of  a  separate  class  or  race,  but  a  slavery  that 
reaches  to  each  of  us,  rendering  our  burdens  unequal 
and  our  rights  insecure, — we  shall  begin  to  perceive 
that  there  are  involved  in  the  question  wrongs  which 
can  neither  be  compromised  nor  concealed  behind 
the  dollar.  In  England  the  question  of  the  repeal 
of  the  Corn  Laws  was  attended  by  a  discussion  per- 
haps as  intelligent,  active,  and  far-reaching  as  was 
ever  apj^lied  to  an  economic  subject.  As  long  as  the 
cause  depended  only  upon  appeals  to  self-interest, 
even  though  this  interest  was  assumed  to  be  governed 
by  the  higher  intelligence  based  on  a  limited  franch- 
ise, reform  seemed  impossible.  The  landed  interest 
which  opposed  the  reform  was  governed  by  a  stiff- 
necked  conservatism  and  blinded  by  selfishness.   The 


PROTECTION  251 

whole  movement  would  probably  have  failed  had  it 
not  been  that  the  Irish  famine  came  to  awake  the 
conscience  of  the  nation  to  the  enormous  wrong 
which  lay  concealed  behind  the  mediaeval  establish- 
ment. It  is  not  impossible  that  with  us  the  evils  of 
protection  will  grow  to  vaster  proportions  than  they 
have  yet  reached  before  we  come  thoroughly  to 
realize  their  cause.  But  of  one  thing  I  think  we 
may  be  certain,  that  we  are  moving  in  the  direction 
of  a  crisis ;  and  that  if  we  will  not  Jearn  by  intel- 
ligent examination  to  solve  the  question,  we  shall 
somewhere  in  its  progress  be  taught  a  solution 
through  necessity.  Nevertheless,  I  believe  there 
are  multiplying  evidences  which  go  to  show  that  we 
are  approaching  a  solution  by  intelligent  methods. 

As  I  have  pointed  out  three  stages  in  the  develop- 
ment of  the  railway  question,  so  I  think  it  may  be 
said  that,  in  the  progress  of  the  tariff  question  three 
periods  may  also  be  distinguished.  The  first  began  im- 
mediately after  the  war,  when  in  consequence  of  the 
enormous  debt  an  unprecedented  activity  was  cre- 
ated, and  the  public,  influenced  by  a  sense  of  ma- 
terial convenience,  Avere  not  inclined  to  consider 
ultimate  results.  The  next  period  began  when,  in 
consequence  of  the  misdistribution  which  the  tariff 
accomplished  in  its  field,  as  the  railway  did  in  the 
transportation  field,  there  grew  up  organizations 
which  expressed  themselves  in  direct  retort — in 
strikes,  and  in  disturbances  of  one  kind  and  another, 
between  labor  and  capital.    Out  of  this  condition,  as 


252  INDUSTRIAL  LIBERTY 

was  natural,  theories  of  all  kinds  were  born.  We 
are  beginning  to  arrive  at  the  third  period  of  the 
development  of  the  subject,  where  a  dispassionate 
interest  in  the  question  and  a  discussion  of  its  under- 
lying principles  may  be  expected.  This  stage  of  the 
(j^uestion  can  hardly  be  said  to  have  begun.  Up  to 
the  present,  it  has  only  shown  itself  to  be  inevitable. 
Here,  too,  as  in  the  case  of  the  railway  manager,  the 
protectionist  himself,  realizing  this  fact,  assumes, 
that  it  is  a  matter  belonging  exclusively  to  him  and 
which  he  alone  is  to  reform.  He  has  had  the  ad- 
vanta2:e  hitherto,  in  whatever  discussion  has  taken 
place,  of  choosing  the  methods  in  which  the  earlier 
stages  of  the  contest  have  been  carried  on.  In 
these  methods  results  are  considered,  statistics  dealt 
with,  and  primal  principles  neglected.  The  force 
of  events  however,  with  considerable  rapidity  is 
stimulating  active  thought  towards  primal  principles, 
and  we  may  hope,  therefore,  that  we  are  on  the 
threshold  of  a  permanent  change.  It  is  not  to  be 
expected  that  the  present  Congress,  or  even  the  next, 
will  come  to  a  thorough  consideration  of  the  whole 
question,  but  the  beginning  is  at  least  assured.  It  is 
quite  probable  that  the  ground  chosen  by  the  protec- 
tionist will  gradually  be  shifted  to  a  place  of  higher 
vantage  for  his  opponent.  Upon  this  new  ground 
there  will  be  opportunities  afforded  for  a  wider  dis- 
cussion, for  the  setting  forth  of  arguments  founded 
upon  the  fundamental  principles  of  industrial  liberty 
— arguments  which  the  protectionist  can  neither  meet 


nor  answer 


CHAPTER  IX 

PATERNAL     GOVERNMENT 

In  order  accurately  to  understand  political  lib- 
erty as  a  right  to  wliicli  every  citizen  is  equally 
entitled,  we  must  consider  it  separately  from  any 
assumed  equality  of  tliose  faculties  wliicli  are  called 
the  mental,  the  moral,  and  the  social.  It  is  often 
assumed  that  these  are  faculties  to  which,  in  some 
indefinite  way,  each  citizen  has  the  same  right  to 
ec^uality  as  that  right  by  which  he  holds  his  political 
freedom.  I  think  it  may  be  shown  not  only  that 
political  equality  does  not  imply  any  equality  of 
these  faculties  in  different  individuals,  but  that,  on 
the  contrary,  it  does  imply  the  necessity  of  a  distinct 
recognition  and  furtherance  of  their  inequality.'  It 
may  also  be  shown  that  meddling  with  these  facul- 
ties in  the  endeavor  to  reduce  them  to  uniformity  is 
one  of  the  chief  characteristics  of  paternal  govern- 
ment, and  that  such  endeavor  arises  from  confusion 

'  It  must  be  owned  that  even  the  Declaration  of  Independence  is  some- 
what uncertain  upon  this  point,  in  setting  forth,  as  it  does,  that  "  all  men 
are  created  equal."  It  would  certainly  have  been  more  definite  and  would 
have  saved  a  great  deal  of  misconception  to  have  used  instead  of  the  tenn 
"equal,"  "with  equal  political  right."  The  words,  however,  which  fol- 
low, "  with  certain  unalienable  rights,"  such  as  "  life,  liberty,  and  the  pur- 
suit of  happiness,"  may  possibly  be  construed  as  limiting  the  former  clause. 


254  INDUSTRIAL   LIBERTY 

concerning  their  true  relation  to  political  liberty.  It 
is  from  tLis  circumstance  that  it  becomes  necessary 
to  place  the  diverse  faculties  in  a  category  by  them- 
selves in  order  that  they  may  be  discriminated  from 
political  equality.  It  may  be  shown,  as  a  corollary 
arising  from  this  diversity  of  human  faculty,  that  a 
])aternal  government  cannot  be  a  free  government, 
and  that  a  free  government  cannot  be  a  paternal  one  ; 
and  further,  tliat  whatever  pretensions  to  beneficence 
there  may  be  in  the  paternal  idea,  when  we  come  to 
examine  it  with  reference  to  the  sum  of  its  conse- 
quences, it  will  be  found  to  be  essentially  an  immoral 
government. 

It  will  probably  appear  from  such  a  discrimina- 
tion that  there  exists  in  the  public  mind  a  consider- 
able degree  of  vagueness  as  to  what  specific  acts  are 
of  the  paternal  kind  ;  that  many  acts  are  more 
or  less  generally  assumed  to  be  paternal  which 
by  analysis  are  not  so,  and  that  conversely  many  acts 
which  are  more  or  less  generally  assumed  to  be  un- 
paternal,  are  paternal.  By  such  examination,  there- 
fore, a  clear  definition  of  paternal  government  may 
be  made.  Although  I  have  already  touched  upon 
the  distinction  between  political  equality  and  the 
assumed  equality  of  faculty,  I  deem  it  of  so  much 
importance  that  I  will  examine  it  here  more  precisely. 
It  is  so  fundamental  in  its  character  that  political 
freedom  not  only  depends  upon  a  clear  realization 
of  it,  but  the  continued  enjoyment  of  freedom  is 
essentially  based  upon  that  realization.     It  is  only 


PATERNAL    GOVERNMENT  255 

with  this  distinction  put  into  practice  that  we  can 
have  true  political  and  industrial  equality.  All 
attempts  to  legislate  directly  or  specifically  in  order 
to  re-mould  these  faculties  tend  to  a  derogation  of 
political  and  industrial  right.  The  failure  to  real- 
ize this  arises  mainly  from  a  surviving  figment  of 
theocracy  wliich  we  unconsciously  retain, — a  the- 
ocracy modified  into  the  vague  idea  of  a  power  in 
government  which  is  mysterious  because  it  cannot  be 
traced  to  any  human  source.  It  is  possible  that  these 
statements  may  seem  somewhat  fanciful,  standing, 
as  they  do,  without  present  illustration,  but  analysis 
will  warrant  them. 

Speaking  definitely,  I  therefore  propose  to  show 
in  this  chapter :  First,  that  nature  produces  those 
faculties  of  man  which  we  call  the  intellectual,  the 
social,  the  moral,  and  the  physical,  in  persistent  di- 
versity ;  that  this  diversity  has  a  tendency  to  increase 
in  kind  but  not  in  degree — that  is,  that  while  varieties 
increase  in  number,  differences  become  less  radical; 
and  that  such  increase  of  these  varieties  marks  the 
growth  of  civilization. 

Second,  that  nature  furnishes  the  physical  re- 
sources for  mankind  in  a  somewhat  similar  diversity, 
expressed  by  differences  of  soil,  of  climate,  and  in 
the  kinds  of  resources  furnished. 

Third,  that  the  only  legitimate  ofiice  of  govern- 
ment is  to  legislate  in  conformity  with  these  natural 
laws,  thus  furnishing  the  largest  sum  of  human 
incentive    and  inducing  tlie  largest  sum  of  human 


256  INDUSTRIAL   LIBERTY 

activity  for  tlie  development  of  these  resources ;  tliat 
these  laws  are  universal,  and  that  only  as  a  govern- 
ment conforms  to  them  does  it  approach  the  higher 
tyj^e  of  political  and  industrial  freedom. 

Fourth,  that  legislation  in  violation  of  these 
lav>"s  is  based  upon  a  false  theory  that  the  govern- 
ment is  something  more  than  a  mere  human  insti- 
tution,— that  it  possesses  a  fiat  power,  and  that  such 
a  government  is  necessarily  paternal  and  necessarily 
vicious. 

I  will  also  attempt  to  furnish  a  criterion  by  which 
paternal  government,  standing,  as  it  does,  in  opposi- 
tion to  these  laws,  may  be  distinguished  from  the 
government  of  self-de23endence,  which  is  in  conform- 
ity with  them  ;  and  will  then  discuss  the  qualities  of 
paternal  government  and  illustrate  some  of  its  evils. 

It  is  greatly  to  be  regretted  that  in  the  multitude 
of  statistics  ^vhich  are  given  by  the  governments  of 
the  civilized  world  decennially,  we  are  not  furnished 
with  the  means  of  deducing  with  nicer  precision  the 
numerical  ratio  of  the  different  classes  eu2:a2;ed  in 
industry.  By  deductions  from  such  well-ascer- 
tained statistical  data  we  should  be  enabled  to 
make  genei'alizations  by  ^\'hich  we  could  determine 
with  considerable  accuracy  the  force  and  extent  of 
nature's  persistence  in  the  distribution  of  human 
faculty.  In  an  effort  to  derive  this  numerical  ratio 
from  the  statistics  of  the  United  States  Census 
Bureau  for  1880,  I  have  found  the  data  insufficient 
to  enable  me  to  make  tlie  desired  classification  \\'\\\\ 


PATERNAL    GOVERNMENT  257 

anything  like  satisfactory  definiteness.  Neverthe- 
less, there  is  sufficient  to  be  derived  from  them  to 
afford  a  basis  for  an  estimate.  By  classifying  these 
different  occupations,  therefore,  I  have  made  the  fol- 
lowing distribution  of  the  seventeen  millions  of  per- 
sons eno^aojed  in  industries  of  one  kind  and  another  in 
the  United  States : 

Of  common  laborers — that  is,  those  engaged  in  man- 
ual occupations  which  require  a  minimum  de- 
gree of  skill       ......         60  per  cent. 

Of  those  engaged  in  manual  occupations  which  re- 
quire a  moderate  degree  of  skill       .         .         20  per  cent. 

Of  those  engaged  in  occupations  which  require  a 

high  degree  of  skill  .         .         .         .         .  12  per  cent. 

Of  those  engaged  in  occupations  which  require  a 

very  high  degree  of  skill  and  intelligence  .         6  per  cent. 

Of  those  engaged  in  occupations  which  require  the 

highest  degree  of  skill  and  intelligence        .        2  per  cent. 

As  I  have  said,  it  cannot  be  assumed  that  this 
classification  is  entirely  accurate,  since  it  has  been 
necessary  to  make  a  discretionary  use  of  the  data, 
and  yet,  when  it  is  supported,  as  it  is,  by  observation 
and  experience,  and  particularly  by  the  generaliza- 
tions of  Quetelet,  which  I  shall  presently  notice, 
there  is  sufficient  in  it  to  warrant  the  reasonable 
inference  of  the  existence  of  the  ratio  Avhich  I  have 
approximately  indicated  as  a  persistent  law. 

This  distribution  of  faculty  in  civilization  seems 
to  me  to  call  to  mind  something  like  a  pyramid.  At 
the  base  we  find  the  greatest  number,  comprising 
those  who  bear  the  greatest  burden  with  the  lowest 


258  INDUSTRIAL   LIBERTY 

degree  of  intelligence,  the  least  degree  of  individual- 
ity, tlie  least  degree  of  intellectual  quality.  Tliey 
constitute  tlie  foundation  of  liuman  society  and  come 
in  closest  contact  witli  the  sternest  necessity.  Among 
those  a  few  will  exhibit  a  little  hio-her  desrree  of  in- 
telligeuce,  and  thus  naturally  come  to  be  the  leaders 
of  the  class — "  the  bosses  of  the  gang."  Above  this 
higher  class  thus  constituted  by  nature's  gift  of 
faculty,  another  smaller  proportion  exists  of  a  little 
higher  intelligence,  possessing  a  little  larger  con- 
structive capacity;  from  this  class  come  the  con- 
tractors. Out  of  the  class  so  created,  by  the  same 
law^,  come  the  architects  and  the  constructors  and 
others  of  larger  intellectual  capacity ;  and  so  on,  in 
the  same  order,  to  the  top  of  the  pyramid,  where  the 
intellectual  man,  the  philosopher,  the  highest  expres- 
sion of  human  faculty,  appears. 

As  early  as  1835,  Quetelet,  beginning  with  the 
doctrine  of  probabilities  announced  by  Pascal,  studied 
the  available  statistics  of  his  time,  and  noted  a  cer- 
tain continuance  and  regularity  in  nature  with  refer- 
ence to  the  distribution  of  human  size  and  weight 
and  of  the  moral  and  intellectual  faculties.  From 
this  he  formulated  w'hat  he  called  a  definite  and  in- 
contestable law  regulating  these  qualities.  His  work ' 
covered  a  great  s[)ace  of  time  and  involved  a  great 
deal  of  patient  effort.  He  marshalled  his  statistics 
with  consummate  skill,  passionless  interest,  and  judi- 

'  "  Sur  I'llonimc,  ct  le  Developpemcnt  dc  scs  Facultes,"  par  M.  A.  Quete- 
let, Paris,  1835. 


PATERNAL    GOVERNMENT  259 

cial  fairness.  His  work  is  peculiarly  distinguishecl 
by  the  compreliensive  character  of  his  researches, 
and  by  his  acumen  in  applying  the  important  science 
of  numbers  to  every  subject  which  he  investigated. 
It  is  from  his  deductions  more  than  from  anything 
else,  confirmed  as  they  seem  to  me  by  all  existing 
conditions,  that  we  are  enabled  to  arrive  at  the  con- 
clusions which  I  have  undertaken  to  give.  If  care- 
ful generalization  from  well-ascertained  statistics  can 
warrant  the  formulation  of  a  law,  then  Quetelet  has 
shown  the  existence  of  the  law  of  the  persistent  di- 
versity of  human  faculty.  But  while  he  established 
the  existence  of  this  law,  he  did  not  specifically  note 
its  relation  to  political  freedom.  The  application 
and  corollary  which  he  did  not  make  have  naturally 
arisen  from  the  subsequent  teachings  of  evolution 
and  political  science.  The  necessity  of  diverse  gifts 
as  a  social  dynamic  force,  tending  persistently,  as  it 
does,  toward  the  differentiation  of  individuality, 
thereby  produces  the  larger  conditions  of  progressive 
civilization.  It  seems  to  me,  therefore,  that  the 
most  important  teachings  of  the  law  are  contained 
in  this  application  to  political  science  and  this  corol- 
lary, since  it  is  these  that  have  the  most  potent  bear- 
ing upon  the  political  units  of  society,  as  showing 
the  relation  of  those  units  to  one  another,  and  the 
tendencies  of  this  relation  in  the  sum  of  civilization. 
By  a  knowledge  of  the  law,  we  shall  be  enabled  to 
discern  the  proper  limits  of  any  interference — to 
learn  how  far  we  may  modify  natural  law  without 


26o  INDUSTRIAL  LIBERTY 

contradicting  it.  Applying  such  knowledge  to  po- 
litical conditions,  we  shall  learn  to  bring  into  some 
harmony  those  conflicts  which  are  going  on  between 
the  order  of  human  legislation  and  the  order  of 
natural  law.  Moreover,  if  tliis  persistent  distribution 
of  faculty  be  a  law  of  onr  being,  and  "\ve  come  to 
realize  it  clearly  as  a  necessity  in  progressive  civili- 
zation, we  shall  be  enabled  to  measure  at  their  true 
Avorth  all  those  efforts  at  paternalism,  however  be- 
guiling they  may  seem  when  proposed  as  temporary 
conveniences  or  temporary  alleviations  of  the  rigor 
of  nature,  because  we  shall  have  the  means  of  meas- 
uring those  farther-reaching  consequences  which 
come  inevitably  from  the  violation  of  the  natural 
law. 

In  the  domain  of  nature  man  has  a  disposition  to 
fancy  himself  a  master,  and  this  is  especially  the 
case  \\A\\i  reference  to  those  laws  which  most  direct- 
ly concern  his  daily  doings,  and  where  the  conse- 
quences of  violation  are  not  so  immediate  as  to  be 
easily  perceived.  On  the  other  hand,  in  those  laws 
whose  operations  are  more  remote — which  do  not, 
therefore,  admit  of  the  possibility  of  human  in- 
terference,— or  in  those  laws  the  operations  of  Avhich 
lie  near  us,  wherein  consequences  of  violation  are  di- 
rect, we  are  usually  more  capable  of  recognizing  the 
certainty  of  nature's  workings.  The  laws  of  the 
movements  of  the  solar  system  are  far  more  definitely 
known  and  appreciated  than  those  of  social  dynam- 
ics.    Nature  has  placed  the  celestial  bodies  beyond 


PATERNAL    GOVERNMENT  26 1 

our  tampering  and  meddling  ;  these  at  least  we  can- 
not disturb.  We  have  the  opportunity  of  studying 
them  objectively  and  divested  of  the  possibility  of  our 
interference.  Observing  their  uniform  action  without 
our  assistance,  we  come  easily  to  recognize  their  con- 
stancy. Here  we  bow  to  the  eternal  and  the  immu- 
table. We  have  long  since  concluded  that  Ave  can- 
not with  any  hope  of  obedience  command  the  sun  to 
stand  still  upon  Gibeon  or  the  moon  in  the  Valley  of 
AJalon.  Even  in  the  province  of  human  faculty 
it  may  be  said  that  where  the  relations  of  cause  and 
eifect  lie  close  together  and  in  the  light,  wherever 
they  cannot  without  difficulty  be  separated  or  mis- 
taken, Ave  readily  realize  the  potency  of  laAV  over  hu- 
man interference.  We  do  not  by  direct  effort  attempt 
to  change  the  size  of  the  human  head,  to  create  convo- 
lutions of  brain.  We  do  not  legislate  concerning  these. 
But  Just  as  the  relations  of  cause  and  eifect  become 
indirect  and  more  remote,  our  efforts  at  interference 
begin  and  grow.  We  have  not  ceased  in  our  at- 
tempts at  arbitrarily  and  artificially  interfering  Avith 
the  human  temperaments  AA'^hich  persist  in  coming 
in  variety.  We  haA^e  not  ceased  our  efforts  to  re- 
move those  inexorable  bounds  of  necessity  Avhich 
nature  persists  in  making  the  conditions  of  life. 
Stimulated  by  our  sympathies  and  our  sentiments,  AA^e 
seek  to  make  the  hardest  part  of  manual  labor  an 
unnecessary  thing,  notwithstanding  it  persists  in 
confronting  us  Avith  all  its  Avonted  hardship;  nor  in  our 
industrial  relations  do  Ave  relax  our  efforts  to  defeat 


262  INDUSTRIAL  LIBERTY 

by  artifice  the  inherent  obligations  of  contract ;  to 
make  an  agreement  something  other  than  an  agree- 
ment ;  to  make  a  day's  work  less  than  a  day's  work ; 
to  compel  men  to  agree  where  they  do  not  agree — 
indeed,  in  numerous  ways  to  interfere  with  and  coun- 
teract the  variety  of  man's  faculties  by  trying  to 
ecpialize  inherent  inequality  by  legislation — levelling, 
not  up^vard  but  downward  ;  in  a  word,  to  endeavor 
to  abolish  eternal  necessity  by  enactment.  Far  as 
these  efforts  may  seem  to  be  from  Joshua's  command, 
they  fall  within  the  same  category ;  they  are  simply 
modifications  of  the  same  blind  attempt  at  the  im- 
2:)ossible. 

No  matter  what  the  form  of  government  may  be, 
there  will  always  be  work  of  different  grades  in 
the  industries.  Each  of  these  grades  will  have  char- 
acteristics which  are  constant ;  and  for  the  perform- 
ance of  the  work  where  the  least  intellectual  skill  is 
required,  a  larger  number  of  human  beings  will  be 
furnished.  The  kind  of  work  to  be  j^erformed  ^vill 
lie  nearer  the  hard  lines  of  necessity  as  the  number 
required  to  perform  the  work  increases.  Under  any 
form  of  government,  there  will  be  ditches  to  be  dug; 
the  labor  Avhich  the  common  laborer  performs  con- 
stitutes the  foundation  of  all  huinan  industry,  and 
with  all  the  adaptation  of  machinery  the  necessity  will 
remain  and  the  amount  of  labor  to  be  performed  will 
grow  with  the  increase  of  the  human  race.  This 
manual  labor  is  not  done  from  pleasure,  and  noth- 
ing we  can  accomplish  can  make  it  pleasant ;  it  arises 
from  necessity,  growing  sterner,  as  I  have  said,  as  it 


PATERNAL   GOVERNMENT  263 

goes  lower. .  So  long  as  the  ditches  are  to  be  dug,  if 
society  is  to  continue,  somebody  must  do  the  digging, 
and  nature  furnishes  the  diversity  of  faculty  which  is 
essential  for  this.  There  is  no  alchemy  which  can  dis- 
sociate labor  from  necessity ;  and  if  there  were,  the 
employment  of  it  would  only  tend  to  defeat  civiliza- 
tion. As  Herbert  Spencer  says :  "  Nothing  but  ne- 
cessity could  make  men  submit  to  this  discipline,  and 
nothing  but  this  discipline  could  produce  continued 
progression.  .  .  .  Nature  secures  each  step  in  ad- 
vance by  a  succession  of  trials  which  are  perpetually 
repeated  and  cannot  fail  to  be  repeated." 

Nor  is  there  any  direct  process  which  can  bring  the 
capacity  of  the  stupid  and  that  of  the  intelligent  man 
to  the  same  intellectual  level.  Nothing  can  directly 
impart  to  the  constitutionally  weak  the  strength  of 
the  constitutionally  strong,  or  directly  strengthen  the 
quality  of  the  muscle.  Nor  can  any  artificial  meth- 
ods create  moral  principles  in  the  man  Avho  lacks 
them,  or  make  his  moral  perceptions  ecpial  to  those 
of  the  man  in  whom  they  are  vivid. 

When  we  are  met  with  a  clear  illustration  of  na- 
ture's laws,  so  that  we  can  easily  perceive  their 
effect,  we  recognize  them ;  but  in  proportion  as  their 
consequences  are  indirect  our  inability  to  perceive  the 
law  grows  greater ;  in  the  courage  and  confidence  of 
ignorance  we  fancy  that  we  can  effect  the  subversion 
of  natural  law.  Nevertheless  the  law  exists  ;  and  as 
it  is  in  the  physical  and  intellectual,  so  also  is  it  in  the 
social  domain,  for  the  social  forces  are  but  the  anal- 


264  INDUSTRIAL   LIBERTY 

ogues  of  these  otlier  forces.  Human  will  acting  objec- 
tively cannot  create  instinct ;  it  cannot  place  the  man 
who  habitually  digs  the  ditch,  and  is  adapted  to  that 
work,  in  close  social  companionship  with  the  intel- 
lectual thinker ;  no  power  of  government  can  effect 
this,  and  the  fact  that  it  cannot,  imports  no  favoritism ; 
it  is  simply  a  fact.  The  laborer  has  no  right  to  intrude 
himself  ^vithin  the  social  circle  of  the  professional  man 
for  precisely  the  same  reason  that  the  professional 
man  has  no  right  to  intrude  himself  ^vithin  the  so- 
cial circle  of  the  laborer ;  nor  is  this  because  the 
laborer  is  any  worse  or  better  than  the  professional 
man.  Each  has  social  rights  which  belong  to  him ; 
these  rights  are  rights  to  each  for  the  enjoyment  of 
his  individual  tastes,  and  these  individual  tastes  are 
different.  In  the  social  domain,  as  in  the  intellectual 
and  the  moral,  no  one  has  any  right  to  command 
my  instincts,  as  I  have  no  right  to  command  those  of 
another,  except  where  the  instincts  of  either  trench 
upon  political  equality.  When  either  undertakes 
political  control,  by  reason  of  this  difference  of 
faculty,  he  becomes  a  trespasser.  Human  fiat  may 
interfere  or  meddle  Avith  the  operation  of  this  law, 
but  it  cannot  finally  defeat  it. 

Our  best  social  ties  are  formed  from  our  likes; 
they  groAV  as  the  result  of  an  inborn  mutual  attrac- 
tion ;  they  may  be  cultivated,  but  they  cannot  be 
created  ;  no  compulsory  process,  no  word  of  com- 
mand, no  artificial  condition,  can  call  them  into 
being.      To  expect  intellectual,  moral,  physical,  or 


PATERNAL    GOVERNMENT  265 

social  equality  is  to  expect  that  Avhicli  could  not  be 
conferred  if  the  whole  world  Joined  in  the  wish 
to  confer  it.  Classes,  therefore,  must  always  ex- 
ist ;  they  grow  out  of  natural  and  necessary  condi- 
tions ;  and  they  also  grow  out  of  the  relations  of 
society.  The  rich  constitute  a  class  as  distinguished 
from  the  poor,  the  thrifty  as  distinguished  from  the 
thriftless,  the  intelligent  as  distinguished  from  the 
stupid.  The  house  servant  implies  the  householder. 
When  we  clearly  recognize  the  necessity  for  these 
classes  and  separate  them  in  their  category  as  existing 
in  necessary  diversity  by  the  law  of  nature,  we  come 
by  this  se[)aration  to  realize  that  under  the  law  of 
political  liberty,  within  the  political  domain,  there  is 
no  recognition  of  any  class  or  difference.  No  one  of 
these  necessary  classes,  nor  any  member  of  such  class, 
has  any  more  or  less  political  right  than  the  right  to 
life,  liberty,  and  the  pursuit  of  happiness ;  and  it  is 
the  unimpaired  preservation  of  this  right  that  con- 
stitutes the  true  function  of  political  government ;  it 
is  this  that  can  be  guaranteed  in  equality.  As  I 
have  elsewhere  said,  this  gift  of  liberty  is  to  every 
one  alike.  If  she  sometimes  permits  her  units 
to  confer  a  power  upon  other  units  which  the 
single  unit  may  not  exercise,  her  motive  for  doing  this 
is  clear  and  simple — it  is  for  the  furtherance,  con- 
venience, and  benefit  of  the  sum  of  the  single  units, 
for  the  political  ecpiality  of  these  units  before  the 
law.  The  delegated  power  comes  from  the  unit  for 
his  advantage,  not  for  his  detriment. 


266  INDUSTRIAL   LIBERTY 

This  law  of  persistent  diversity  in  faculty  is  coeval 
Antli  the  human  race.  From  the  beginning  each  one 
has  had  some  separate  quality  in  him  to  contribute  to 
the  whole.  The  degree  of  political  slavery  in  the 
history  of  any  nation  may  be  measured  with  reasona- 
ble exactness,  by  the  degree  in  which  power  has  been 
exercised  in  the  control  of  human  faculties.  Just  as 
government  was  capable  of  exercising  paternal  in- 
fluence, no  matter  Avhat  the  motive,  whether  benefi- 
cent or  selfish,  just  in  that  degree  absolutism 
prevailed  and  human  freedom  declined.  And  if  the 
power  to  interfere  Avith  this  natural  distribution  of 
faculty  had  been  equal  to  desire,  civilization  would 
long  since  have  been  defeated  and  the  world  itself 
lost  in  chaos.  It  is  due  to  the  persistence  with  which 
nature  asserts  and  reasserts  this  distribution,  despite 
man's  eft'orts  at  interference,  that  modern  civilization 
has  acquired  whatever  freedom  it  possesses.  Occa- 
sionally, as  mankind  caught  better  glimpses  of  the 
law  and  conformed  to  it,  human  liberty  made  its 
largest  strides,  and  as  the  perception  became  dimmed 
and  blurred,  civilization  gradually  went  backward. 

Political  freedom  and  equality,  however,  so  far 
from  importing  in  any  case  the  necessity  for  political 
classes,  demand  their  entire  abolition,  and  in  so 
doing  secure  the  freest  play  of  all  those  differences 
which  are  created  by  the  diversity  of  nature's  gift 
of  faculty.  Paternal  government,  founded,  as  I  shall 
presently  show,  upon  the  figment  of  the  divine  right 
of   kings,  presupposing,   as   it   does,  a   power   and 


PATERNAL    GOVERNMENT  267 

a  right  in  soDie  to  govern  by  favor,  cannot  help  cre- 
ating political  distinctions  and  thereby  of  necessity 
interfering  with  the  operation  of  nature's  law  of  dis- 
tribution of  faculty.  In  the  normal  functions  of  a 
free  government  it  is  tlierefore  not  simply  a  matter 
of  policy  whether  this  or  that  faculty  or  quality  shall 
be  restrained  or  promoted  by  human  legislation  ;  it 
is  a  principle  inherent  in  the  structure  of  real  politi- 
cal liberty,  that  they  shall  not  be  interfered  with ; 
and  no  matter  what  pretext  there  may  be  for  the 
exercise  of  power,  the  power  of  a  free  government 
can  be  nothing  greater  than  that  which  is  required 
in  order  to  remove  obstructions  to  individual  po- 
litical right,  and  thus  permit  to  the  diversity  of 
faculty  its  free  scope.  It  cannot  be  a  legitimate 
governmental  power  to  take  care  of  the  individual 
or  to  put  him  in  a  class ;  its  functions  are  fulfilled 
in  preventing  artifices  from  interfering  with  him — in 
placing  him  as  nearly  as  possible  in  a  position  of 
self-dependence  by  removing  restraints,  barriers,  and 
hindrances  to  the  exercise  of  the  self-dependence  by 
which  individual  manhood  grows.  Were  there  a 
democracy  containing  ideal  liberty  in  which  the 
preservation  of  such  ideal  liberty  was  the  paramount 
consideration,  duly  impressed  upon  each  individual 
constituting  the  public,  there  could  not  possibly  exist 
any  artificial  structure,  erected  for  convenience  ^vhich 
would  be  permitted  to  interfere  with  this  individual 
right.  There  could  be  in  such  a  government  no  idea 
of  the  divine  right  of  any  citizen  over  another  citizen 


268  INDUSTRIAL   LIBERTY 

or  of  any  one  class  over  anotlier  class.  Eacli  individ- 
ual right  would  stand  upon  its  own  basis,  the  indi- 
vidual possessing  it  being  the  sole  repository  of  that 
right,  and  whatever  was  contributed  by  him  would 
be  a  contribution  for  the  furtherance  of  the  equal 
political  right  of  all.  Thus  in  a  true  republic 
there  may  be,  there  are,  there  must  be,  classes; 
but  among  them  there  is  no  laAV-created  political 
class.  Each  citizen  stands  as  a  political  unit,  su- 
preme to  all  classification,  and  on  a  perfectly  equal 
plane  with  every  other  citizen  as  a  political  unit. 
Each  man  is  essentially  different  from  every  other 
man  in  respect  to  his  faculties.  But  his  right  to 
the  free  use  of  those  faculties,  in  accordance  with  the 
right  of  every  other  man  to  a  like  use  of  his  faculties, 
constitutes  political  equality. 

Much  that  I  have  said  on  this  subject  may  seem 
commonplace,  but  this  distinction  between  political 
equality  on  the  one  hand,  and  the  assumed  equality 
of  the  faculties  on  the  other,  is,  I  think,  one  that  is 
more  blurred  than  any  in  political  discussion,  and 
there  is  no  one  that  needs  to  be  so  constantly  in- 
sisted upon.  In  almost  all  of  the  political  ideas  of 
the  day  there  seems  to  be  more  or  less  confusion  con- 
cerning it,  and  the  clearest  possible  understanding 
is  needed  of  the  line  between  the  two,  because  it  is 
also  the  line  between  license,  communism,  socialism, 
and  nihilism  on  the  one  hand,  and  political  freedom 
on  the  other,  and  between  what  is  mis-called  protec- 
tion and  industrial  emancipation. 


PATERNAL    GOVERNMENT  269 

The  Freucli  motto,  "  Libeite,  Egalite,  Fraternite," 
furnishes  a  clear  instaoce  of  the  confusion  which 
comes  from  confounding  political  equality  Avdth  the 
assumed  equalities  of  faculty.  A  liberty  which 
aims  at  social  equality,  ^vdlich  undertakes  to  enforce 
fraternity,  is  no  liberty,  but  a  license,  and  cannot  by 
any  possibility  produce  equality,  since  equal  politi- 
cal liberty  can  only  live  by  the  recognition  of  the 
inequalities  of  the  faculties.  Its  proper  influence 
vq3on  those  inequalities  can  only  be  to  keep  them 
from  interference  with  each  other — to  stimulate 
them  to  the  greatest  variety  within  this  bound  ;  and 
this  influence  is  not  only  not  restraint  in  the  real 
sense,  but  it  is  the  removal  of  restraint  from  the  de- 
velopment of  these  varieties ;  rather  it  is  not  a 
restraint  of  freedom,  l)ut  a  restraint  of  license,  ex- 
ercised in  order  that  freedom  shall  have  its  largest 
scope  in  being  equal.  It  is  due  to  the  fact  that  a 
clearer  perception  of  this  prevailed  in  America  than 
in  France,  that  America  has  worked  out  results  so 
radically  different  from  those  which,  in  France  after 
the  Kevolutiou,  bore  the  people  back  into  the  arms  of 
monarchy  as  a  necessary  protection  from  themselves. 

We  have  not  then  in  legislation  to  deal  with  the 
social  contract,  but  Ave  have  to  deal  with  the  indus- 
trial contract.  The  freedom,  the  exactness,  and  the 
sanctity  of  this  contract  well  preserved,  the  endow- 
ments of  nature,  its  gifts  of  variety,  will  grow  in 
accordance  with  it,  and  grow  at  their  best. 

It  may  be  set  down  therefore  as  a  conclusion,  that 


2/0  INDUSTRIAL  LIBERTY 

civilization  rests,  not  upon  the  equality  of  faculty, 
but  upon  its  inequality — its  diffusion  into  diversity ; 
that  its  progress  is  marked  by  this  inequality — by 
its  increase  in  kind,  not  in  degree ;  that  this  is  ac- 
complished through  the  preservation  of  political 
equality;  and  that  nature's  efforts  in  preserving 
this  diversity  have  in  the  long  run  been  greater  than 
man's  efforts  at  obstruction. 

Passing  from  mankind  with  his  varied  faculties  to 
the  things  upon  which  man  operates,  the  resources 
of  nature,  we  shall  find  these  also  to  exist  in  neces- 
sary diversity,  not  only  of  the  gifts  themselves,  but 
of  the  conditions  under  which  those  gifts  are  con- 
ferred. 

As  in  the  artificial  treatment  of  the  faculties,  so 
also  in  the  artificial  treatment  of  nature's  resources, 
man  conceives  himself  to  be  a  master  wherever  he 
can  effect  an  interference ;  and  this  conception 
exists  here,  as  in  the  case  of  the  faculties,  just  where 
the  consequences  of  violation  are  indirect  and 
therefore  not  so  readily  realized.  When  these 
consequences  become  direct  we  recognize  the  po- 
tency of  the  law  by  the  quick  penalty  of  its  viola- 
tion, and  are  therefore  restrained  from  continued 
interference  and  infraction.  As  cause  and  effect 
separate,  our  efforts  at  interference  begin  and  en- 
large. Because  we  do  not  see  these  consequences  of 
violation  we  fancy  they  do  not  exist,  but  the  results 
of  a  violated  law  of  nature  are  not  rendered  any  the 
less  certain  because  of  their  indirectness.     In  the 


PATERNAL    GOVKRNMKNT  2/1 

end  tlie  inexorable  penalties  are  measured  out  with 
exactness,  and  the  volume  of  these  penalties  is  in- 
creased in  proportion  to  the  length  and  extent  of  the 
violation.  We  do  not  attemj)t  to  raise  a  barrier 
against  latitude — to  grow  troj)ical  fruits,  by  artificial 
processes,  for  commerce  in  the  North,  to  the  exclu- 
sion of  the  natural  tropical  products;  nor  have  we 
yet  committed  ourselves  to  any  effort  of  legislation  by 
Avhich  the  lean  gold  ore  of  North  Carolina  shall  be 
made  equal  in  value  to  the  rich  gold  ore  of  California, 
through  taxing  California's  product  in  order  that  the 
mines  of  Carolina  shall  be  supported ;  nor  by  the 
other  artifice  of  taxing  the  citizens  generally  to  fur- 
nish a  bounty  of  something  more  than  a  dollar  to 
those  who  from  their  lean  ore  can  produce  something 
less  than  a  dollar.  Here  the  cause  and  effect  are  too 
near ;  the  absurdity  of  the  violation  is  too  manifest. 
And  yet,  with  a  little  more  indirectness,  if  we  will 
follow  it  out,  the  same  kind,  although  a  less  degree, 
of  solecism  will  be  found  to  exist  in  those  artificial 
regulations  of  tariff  to  which  we  have  committed 
ourselves. 

Nature  gives  her  resources  to  the  whole  world  to 
be  employed  in  accordance  with  her  law.  This  law 
allows  the  most  activity  where  these  resources  are 
most  available,  the  least  activity  where  they  are  least 
available.  Each  part  of  the  globe  has  some  natural 
advantages  over  every  other  part ;  and  in  the  ex- 
change of  these  lie  the  true  conditions  of  barter. 
The  distribution  is  one  which  is  not  made  by  arti- 


2/2  INDUSTRIAL   LIBERTY 

ficial  geographical  State  or  national  limits.  It  lias 
come  from  geological  deposits,  and  is  modified  by 
climatic  influences.  Here,  as  elsewhere,  nature  will 
not  be  Juggled  with  nor  defeated.  While  such  arti- 
ficial interferences  as  we  emplo}'  may  stimulate 
the  resources  of  localities  into  excessive  activity  and 
apparent  prosperity  for  ten,  twenty,  thirty,  or  forty 
years,  the  causes  of  the  interference  are  abnor- 
mal. The  effects  of  these  e\'ils  may  be  postponed  by 
the  richness  and  extent  of  our  territory,  but  they  are 
constantly  gathering  momentum,  and  ^\■ill  at  last  be- 
come overwhelming.  Every  step  thus  taken  is  away 
fi'om  liberty,  away  from  natural  law;  and  the  penalties 
are  not  obliterated,  but  slowly  gather  force  for  the 
greater  retribution  which  comes  from  the  more  per- 
sistent violation.  AVhilst  we  may  thus  force  a  tempo- 
rary prosperity  by  such  violation,  \\%  are  sowing  the 
Avind  that  oui-  ]>rogeny  shall  reap  the  Avhirlwind. 

These  advantaij^es  of  location  and  natural  conditions 
are  exhibited  in  variety  of  soil,  climate,  and  volume. 
It  is  the  province  of  man  to  develop  the  resources 
in  accordance  with  the  law  Avhicli  environs  the  gift, 
in  exact  i-ecognition  of  the  diversit}- ;  and  nature  in- 
evitably resists  the  creation  of  any  artificial  means 
by  \v'hich  this  development  in  any  place  is  made  at 
the  expense  of  any  other  place  where  the  develop- 
ment is  in  accordance  with  her  law.  Putting  uj), 
therefore,  a  tariff  as  an  artifice  to  overcome  the  law, 
assume  it  as  we  may  to  be  a  permanent  principle,  is  in- 
evitably going  counter  to  natural  law  and  equal  right. 


PATE  Rival  government  273 

Here  then  are  nature's  great  and  persistent  diver- 
sities. Slie  furnislies  mankind  ^vith  varied  endow- 
ments, and  insists  on  tlie  maintenance  of  that  variet}^ ; 
she  furnishes  mankind  ^vitll  mciterial  resources  in  like 
variet}',  and  insists  upon  the  conditions  of  this  variety. 
The  problem  of  human  life  and  of  civilization  consists 
in  the  proper  application  of  the  sum  of  these  diverse 
faculties  to  the  development  of  the  sum  of  these  di- 
verse resources.  Manifestly  that  jieople,  wherever 
they  are  situated,  ^vho  together  make  the  most  natural 
adaptation  of  these  gifts  will  be  the  most  free,  and, 
whatever  their  resources,  will  have  the  largest  pro- 
portionate number  of  industrial  citizens,  the  best  pos- 
sible diffusion  of  their  wealth,  and  the  most  natural 
and  permanent  prosperity  of  which  human  society  is 
capable. 

Three  laws  may  thus  be  named :  nature's  gift  of 
diverse  faculty,  nature's  gift  of  diverse  resources, 
and  the  equalized  human  incentives  for  the  develop- 
ment of  both  the  faculties  and  the  resources. 

I  regard  the  recognition  of  these  laws  as  of  such 
transcendent  importance  that  1  think  I  may  safely 
re-affirm  that  no  exact  definition  of  political  equality 
can  be  made  without  that  recognition ;  that  no  such 
equality  can  be  enjoyed  without  strict  regard  to 
these  diversities  of  faculty  and  resources,  and  the  ne- 
cessity for  the  preservation  of  the  equality  of  human 
incentive  in  their  development.  The  right  in  a  free 
government  which  any  delegates  can  acquire  from 
the  people  is  only  the  right  to  pass  laws  in  recogni- 


2/4  INDUSTRIAL   LIBERTY 

tion  of  that  equal  incentive.  And  wlien  sucli 
delegates  commit  themselves  to  any  act  by  which 
they  assume  powers  which  the  people  did  not  and 
could  not  give  them,  the  authority  for  such  as- 
sumption rests  some^vhere  else  than  on  the  principle 
of  political  and  industrial  liberty,  it  comes  some- 
where else  than  from  a  human  constituent,  and 
must  rest  upon  the  assumptioii  of  divine  right.  The 
attempt  on  the  part  of  any  of  those  delegates  to 
qualify  this  principle  in  the  least  degree,  whether 
such  an  attempt  be  made  by  reason  of  a  majority,  or 
even  by  reason  of  universal  consent,  will  be,  accord- 
ing to  its  scope  and  its  persistence,  injurious  or  de- 
structive. 

However  it  may  be  compounded,  compromised, 
interfered  with,  political  and  industrial  equal  right 
is  not  any  the  less  a  right.  A  government  of  free- 
men in  its  simplicity  is  only  a  body  of  men  joining 
in  a  common  political  agreement  to  use  their  varied 
gifts  of  nature  without  interfering  with  each  other, 
upon  the  varied  resources  furnished  by  nature,  in 
accordance  with  the  law  of  the  variety  of  those 
I'esources.  This  constitutes  a  free  government,  and 
such  use  constitutes  classical  political  equality,  politi- 
cal freedom,  and  industrial  freedom. 

Thus  at  last  we  find  political  liberty  resting 
upon  equal  political  right,  imconfused  with  those 
essential  differences  of  endowment  which  are  con- 
ferred by  birth.  We  find  it  thus  resting  through 
the  vivid  recognition  of  self-restraint  in  each  indi- 


PATERNAL    GOVERNMENT  275 

vidual,  seated  at  last  in  the  sense  of  justice.  This 
liberty  is  entirely  clear  in  all  its  demands — it  in- 
sists upon  simple  recognition  by  each  individual  for 
the  recognition  which  it  gives  each.  These  bounds 
arise  from  necessity,  not  from  chance ;  and  just  so  far 
as  we  conform  to  that  necessity  we  possess  ourselves 
of  the  gift,  and  just  so  far  as  we  disregard  it  we  lose 
our  possession. 

Manifestly  there  is  no  room  here  for  a  king,  for  an 
hereditary  nobility,  for  an  industrial  class  privilege, 
for  an  industrial  class  immunity,  for  any  favoritism 
from  the  common  interest.  These  fundamental 
terms  will  produce  a  government  that  will  be  just ; 
they  cannot  produce  one  ^vhich  can  be  generous, 
for  there  is  no  fund  possible  with  which  to  be  gener- 
ous. Such  a  government  derives  its  resources  for 
the  common  purpose  of  equality,  not  for  any  munifi- 
cence, not  for  any  favors,  but  solely  to  support  its 
power  to  prevent  favors  and  maintain  equality.  It 
is  on  account  of  these  features  that  it  is  a  thor- 
oughly human  institution;  and  any  other  feature 
introduced  into  the  government  is  to  be  attributed 
to  our  failure  to  realize  our  relations  as  human — to 
attribute  to  them  some  supernatural  quality.  As  I 
said  at  the  beginning  of  this  chapter,  a  part  of  the 
common  delusion  with  reference  to  the  functions 
of  government  arises  from  a  surviving  superstition 
of  the  divine  right  of  kings,  and  that  such  a  view 
might  appear  fanciful ;  but  this  seems  to  me,  never- 
theless, a  legitimate  conclusion  from  the  prevalent 


2/6  INDUSTKIAL   LIBERTY 

and  groA\dng  disposition  there  is  toward  a  paternal 
form  of  government  among  lis.  Not,  of  course, 
that  there  is  a  definite  and  always  concise  theory 
of  this  kind  in  our  minds,  but  it  lingers  as  a  remnant 
of  the  old  superstition.  So  little  is  this  realized  that 
doubtless  if  the  averao-e  American  citizen  were 
charged  with  the  belief  in  the  divine  right  of  gov- 
ernment or  of  kings,  he  would  promptly  resent  the 
charge  as  a  reflection  upon  his  intelligence. 

I  ^vill  very  briefly  endeavor  to  trace  the  history  of 
this  superstition  through  its  modifications  from  the- 
ocracy to  paternalism.  Civilization  undoubtedly  be- 
gan mth  the  theocratic  idea.  In  theocracy  the 
dogma  was  that  the  government  was  the  direct 
act  of  God.  Modified  by  time,  the  king  came  to 
take  his  authority  as  the  delegate  of  God,  and  from 
this  arose  the  theory  of  the  divine  right  of  kings.  It  is 
thus  that  mankind  has  persistently,  in  one  way  and  an- 
other, througli  many  phases  of  modification,  assumed 
the  power  of  government  to  be  from  heaven.  In 
Rome,  the  emperor  claimed  his  direct  descent  from 
the  gods,  and  when  the  gods  and  the  emperor  were 
overthrown  the  right  came  from  the  unction  imparted 
by  the  Pope.  The  attempts  at  paternal  interference 
by  ecclesiastical  power  acting  through  state  authority, 
were  constant  and  persistent.  The  conflicts  of  the 
claimants  of  divine  right  were  innumerable.  When 
the  Keformation  overthre\v  the  direct  power  of  the 
Church,  the  conferrer  of  tliis  right,  the  supersti- 
tion  (]i(l    not  cease,  Itiit   coiitiinKM]   bv  the  union   of 


PATERiVAL    GOVERNMENT  27/ 

the  Church  and  State  in  the  person  of  the  king  as 
divinely  anointed.  There  were  exceptions  when 
the  people,  pressed  by  the  intolerable  tyranny  of  the 
monarch,  were  driven  to  the  necessity  of  recognizing 
something  other  than  the  divinity  of  his  right.  Thus, 
when  at  the  trial  of  Charles  I.  the  House  of  Peers 
refused  to  concur  and  there  was  no  king  to  approve, 
the  Commons  passed  an  ordinance  "  that  the  people 
under  God  are  the  original  of  all  just  power."  This, 
however,  was  but  an  ebullition  arising  from  the 
severe  exigency  of  the  case  ;  the  ordinance  was  only 
the  Avarrant  which  they  sought  for  a  special  act,  and, 
therefore,  not  to  be  regarded  as  a  realization  of 
the  principle,  for  when  Cromwell  w^as  asked  what  he 
would  do  if  he  were  to  meet  the  king  upon  the  bat- 
tle-field, and  replied,  "  I  Avould  shoot  him,"  it  shocked 
the  sense  even  of  his  own  army.  Though  they  were 
fighting  for  this  instance  of  the  principle,  they  could 
not  bring  themselves  to  a  realization  of  the  principle 
itself  as  governing  human  right.  To  the  man  who 
sees  around  him  in  the  fundamental  law  of  his  coun- 
try, in  the  associations  of  his  life,  the  existence  of 
laws  of  primogeniture,  entailment,  and  perpetuity, 
who  has  been  taught  that  these  are  essentials  of 
government,  that  they  underlie  all  orders  of  society, 
and  are  necessary  to  ^vholesome  growth,  education, 
culture, — in  a  word,  that  they  are  the  very  essen- 
tials of  civilization, — to  such  an  one  there  can  be  no 
such  thing  as  a  favorable  recognition  of  a  liberty,  of 
a   ci\dlization   whose  existence  depends    upon    the 


2/8  INDUSTRIAL   LIBERTY 

abolition  of  limitations  wliicli  are  imposed  by  one 
generation  upon  tlie  incentives  of  its  successors, 
and  upon  tlie  absence  of  all  hereditary  right  to  rule, 
— in  other  words,  upon  a  larger  modern  idea  of  po- 
litical liberty. 

John  Locke  combated  the  theory  of  divine  right, 
and  it  soon  came  to  be  assumed  that  the  theory  was 
overthrown.  The  Act  of  Settlement,  by  which 
William  became  the  ruler  of  England  as  from  the 
people,  was  mainly  the  fruit  of  his  work.  But  the 
hereditary  right  of  the  ruler  still  continued,  and 
under  the  conditions  upon  which  English  society  is 
constructed  the  idea  could  not  have  been  eradicated  ; 
it  Avas  only  one  of  the  first  real  steps  in  that  direc- 
tion. The  Englishman  of  to-day  will  doubtless  as- 
sume that  the  theory  is  exploded  and  has  left  no 
trace  in  his  government.  Mr.  Freeman,  "who  may 
be  accepted  as  one  of  the  foremost  of  the  English 
historians  who  have  addressed  themselves  to  the  dis- 
cussion of  modern  freedom,  cites  a  sentence  from 
Perikles  as  a  classical  definition  of  democracy. 
"  Democracy,"  he  says,  "  according  to  Perikles,  is  a 
government  of  the  whole  people  as  opposed  to  an 
oligarchy,  the  government  of  only  part  of  the 
people." '  He  thereupon  proceeds  to  limit  the 
force  of  this  definition  by  saying  that  "  it  does 
not  forbid  respect  for  ancient  birth,  or  even  an 
attachment  to  the  hereditary  line  of  rulers,"  and  this 

•  "  Growth  of  llie  English  Constitution."  E.  A.  Freeman.  Macmillan  & 
Co.,  London,  p.  lo. 


PATERNAL    GOVERNMENT  2jg 

statement  commits  him,  whether  he  will  or  not,  to 
the  dogma  of  the  divine  right  of  kings ;  because 
whenever  it  is  conceded  that  there  is  any  power 
^vhich  confers  a  right  to  rule,  save  only  that  con- 
ferred by  delegation  of  those  who  are  ruled,  and 
where  it  is  conceded  that  the  rule  is  anything  more 
than  a  guarding  of  the  equal  political  right  of  the 
originators  of  that  rule,  there  must  be  in  this  con- 
cession an  acknowledgment  of  divine  right ;  for  such 
rule  of  government  is  something  more  than  a  human 
agreement,  and  contemplates  a  source  of  power 
which  does  not  and  cannot  originate  in  a  human 
right.  It  presupposes  a  fiat  power,  and  is  an  instance 
of  that  suj^erstition  which  invariably  attributes  to 
divinity  a  power  and  a  disposition  to  interfere  with 
and  override  natural  laws.  A  people  ruled  by  a 
king  and  an  order  of  nobility  Avhich  has  existed  for 
ages,  who  fancy  the  security  of  government  to  con- 
sist in  these  conditions,  whatever  degree  of  con- 
stitutional freedom  they  may  have  in  subjection  to 
them,  if  they  are  satisfied  with  their  government, 
cannot  form  a  Just  conception  of  one  in  Avhich  these 
conditions  are  entirely  extirpated.  The  English 
mind  is  conservative.  In  this  conservatism  it  be- 
lieves there  is  quiet  and  permanency.  It  attrib- 
utes these  blessings  to  existing  orders ;  it  is 
moved  by  its  reverence  for  traditions  and  by  the 
fear  of  those  evils  which  inevitably  belong  to  transi- 
tion. Whatever  transitions  there  have  been,  there- 
fore, within  the  past  twenty  or  thirty  years,  have 


28o  INDUSTRIAL   LIBERTY 

been  tlie  result  of  dynamic  influences  mucli  more 
than  of  intellectual  discussion.  Yet,  measuring  time 
as  we  do,  the  ultimate  abandonment  of  a  king  is 
a  long  way  off.  Meanwhile  that  class  of  arguments 
which  is  thus  assumed  to  be  founded  not  upon  tradi- 
tion, but  upon  principle,  continues  to  be  impressive 
and  prevalent.  Thus  it  is  said  that  in  any  stage  of 
civilization  the  more  intellic^ent  ouo-ht  to  influence 
the  less,  and  this  is  set  forth  as  the  full  ^varrant  for 
the  superstition.  But  this  does  not  constitute  the 
issue.  The  real  question  is,  whether  this  influence 
cannot  better  be  exerted  by  persuasion  and  example, 
which  lie  in  accord  with  equal  political  liberty,  rather 
than  by  the  exercise  of  compulsion,  based  upon  an  as- 
sumed right  to  govern  which  only  exists  in  dero- 
gation of  this  equal  liberty. 

Mr.  Herbert  Spencer,  in  looking  at  the  structural 
principles  rather  than  the  forms,  observes  that  the 
divine  right  of  kings  in  England  has  simply  been 
transferred  from  a  monarch  to  a  parliament.  He  says 
that  "  governmental  authority  is  unlimited  and  dates 
back  to  times  ^vlien  the  law-giver  was  supposed  to 
have  a  ^varrant  from  God;  and  it  survives  still, 
though  the  belief  that  the  law-giver  has  God's  war- 
rant has  died  out."  ^ 

AVlien  our  ancestoi's  came  to  America,  they  un- 
doubtedly aimed  to  expunge  the  last  remnant  of  this 
superstition ;  and  when  we  became  self-governing, 
our  attention  was  naturally  more  attracted  to  the 

'  "  Man  -vs.  The  State,"  New  York,  18S5,  p.  79. 


PATERNAL    GOVERNMENT  28 1 

structure  of  our  self-i]:overmni>;  institutions.  We  bec^an 
to  call  the  individual  the  sovereign,  and  the  officer  of 
the  government  the  servant  of  this  sovereignty.  The 
Chiu'ch  was  divorced  from  the  State ;  what  is  called 
toleration  was  established ;  and  this  was  in  the  di- 
rection of  the  abolition  of  divine  ris-ht.  But  we 
nevertheless  failed  to  perceive  that  in  the  very  essen- 
tial quality  of  part  of  our  policy  there  still  remained 
a  certain  degree  of  this  delusion  ;  that,  in  order  en- 
tirely to  abolish  it  with  all  its  consecpiences,  it  would 
be  necessary  to  abolish  every  element  of  political 
class  distinction — everything  that  could  possibly  be 
the  foundation  of  such  distinction. 

Instead  of  extirpating  this  delusion,  we  only  modi- 
fied it ;  modified  it  from  a  positive  conscious  belief 
to  a  negative  figment.  This  figment  still  exists,  not 
in  the  assertion  of  the  dogma  as  an  act  of  faith,  but  in 
those  necessary  inferences  which  come  from  our  adher- 
ence to  policies  and  to  acts  which  are  the  sequels  of 
that  dogma.  It  lingers  still  in  the  assumption  that  by 
Heaven's  unequal  gift  in  the  distribution  of  faculty 
there  is  conferred  somewhere  the  I'ight  of  some  per- 
sons assuming  to  be  more  capable,  to  rule  others  ;  and 
there  is  but  a  step  from  this  assumption  to  that  other 
in  the  same  category,  that  a  legislature  can  supplant 
natural  laws  by  the  force  of  human  edict.  Hence  it 
arises  that  the  philanthropic  theorist  Avho  is  educated, 
measures  the  needs  of  humanity  by  the  standard  of 
his  own  acquisitions,  and  not  by  the  objective  exam- 
ination of  those  needs.     Assumincf  it  to  be  his  rio-ht 


282  INDUSTRIAL    LIBERTY 

to  resriilate  tliino-s  accordiiis;  to  liis  standard,  lie 
seeks  a  power  for  enforcing  this  riglit  througli  a 
majority,  and  securing  this,  places  his  artificial  re- 
straints upon  the  equal  political  liberty  of  the  people. 
It  is  not  difficult  to  see  just  ^vhere  this  superstition 
arises  in  the  processes  of  the  formation  of  what  is 
assumed  to  be  a  free  government.  If  t^vo  men 
were  to  make  an  agreement  for  the  joint  and  equal 
occupancy  of  a  house,  and  one  by  shrewdness, 
craft,  or  beguilement  Avere  to  succeed  in  occupying 
the  greater  part  of  that  house  to  the  exclusion  of  the 
other,  even  if  acquiesced  in, — anyone  could  readily 
realize  that  the  agreement  for  equality  was  broken. 
There  could  be  no  interposition  of  mystery,  no 
(piestion  of  artificial  power ;  it  would  simply  be 
recognized  as  a  broken  agreement.  The  agreement 
made  by  fifty  millions  of  people  for  the  equal  en- 
joyment of  political  liberty  has  no  essential  differ- 
ence, so  far  as  its  human  qualities  ai'e  concerned, 
from  the  simpler  agreement  between  these  t"\vo. 
Nevertheless,  in  the  case  of  the  agreement  of  the 
government,  there  comes  to  be  the  notion  that  the 
custodians  of  that  agreement  are  something  more 
than  the  custodians  for  each  of  the  constituents  of 
that  agreement,  for  the  preservation  of  its  terms.  We 
come,  therefore,  to  think  of  this  mere  aggregation  as 
containing  a  secret  power  Avhich  is  more  or  less 
mysterious  and  supernatural ;  and  this  is  the  survival 
of  the  delusion  of  the  divine  right.  The  figment  is 
therefore  founded  upon  the  theory  that  somehow,  as 


PATERNAL    GOVERNMENT  283 

I  have  said,  by  Heaven's  iinec|iial  gift  in  the  distribu- 
tion of  faculty, — an  inequality  which,  as  we  have  seen, 
is  the  result  of  a  persistent  law, — there  is  c(^nferred 
upon  some  of  those  who  have  the  higher  (qualities  of 
faculty  a  right,  not  to  lead  nor  to  convince,  but  to  gov- 
ern others  who  are  less  favorably  endowed ;  that  some- 
how there  is  conferred  upon  some  men  the  right  to 
make  rules  which  shall  supplant  natui'e's  la^v  of 
diverse  resources  ;  that  by  persistence  in  these  arti- 
fices they  can  at  last  overcome  this  law;  that  all 
they  need  to  this  end  is  to  secure  the  machinery  of  a 
majority;  and  that  with  this  there  is  no  limit  to 
their  power.  This  assumes  that  men  who  are  best 
endowed  are,  therefore,  favorites  of  Heaven  for  the 
government  of  those  less  endowed.  Political  free- 
dom, upon  the  other  hand,  declares  that  men  are 
endowed  \A'ith  varied  gifts  of  faculty  for  the  pur- 
pose of  enabling  them  to  make  the  largest  and  best 
contributions  to  civilization,  and  not  for  the  purpose 
of  enabling  some  to  i*epress  the  faculties  of  others. 

The  man  who,  from  a  belief  in  his  superior  wis- 
dom, or  from  an  assumption  of  his  superior  moral 
quality,  reasons  himself  into  a  right  to  interfere, 
through  legislation,  in  anything  which  tends  to  re- 
press or  mould  the  faculties  of  others  in  accordance 
with  his  morals  or  his  conscience,  or  to  opj)Ose  the 
law  of  nature's  diversity  of  product  with  artificial 
means,  or  in  any  manner  to  reach  out  directly  in  in- 
terference with  another's  faculties,  reasons,  although 
it  may  be  unconsciously,  with  precisely   the  same 


284  INDUSTRIAL   LIBERTY 

mental  j)rocesses  wliicli  moved  the  Churcli  of  Rome 
to  regulate  tlie  faitli  of  a  people  by  the  assumption 
of  an  authority  for  that  purpose  from  Heaven. 

When,  therefore,  we  shall  succeed  in  eliminating  all 
trace  of  the  divine  right  from  a  government  other- 
wise free,  we  shall  find  the  necessary  result  to  be  ex- 
act political  equality  ;  since  if  no  man  is  born  with  a 
right  to  govern  another,  nor  is  recognized  as  receiv- 
im>:  such  rio'ht  bv  reason  of  education,  intellectual  or 
social  (pialities,  the  elimination  of  these  factors  from 
political  right  must  of  necessity  leave  it  entirely  equal. 
We  thus  see  that  this  superstition  has  been  per- 
sistent from  the  beginning  of  history  :  first  as. seated 
in  theocracy  ;  then  when  in  the  progress  of  civiliza- 
tion theocracy  was  driven  out,  superstition  remained 
in  the  conception  of  the  king  as  a  divine  vicegerent. 
Driven  thence  by  the  further  growth  of  civiliza- 
tion, it  found  its  refuge  in  the  Church :  and  further 
driven  out  by  the  divorce  of  Church  from  State,  it 
has  at  last  concealed  itself  in  assumed  democracy 
under  the  form  of  paternalism.  The  worshippers  at 
the  shrine  of  this  superstition,  conscious,  or  uncon- 
scious, comjorise  those  ^vho  would  recognize  in  one 
way  and  another  the  right  to  artificial!}'  change 
the  incentives  of  human  industry — tlie  faculties  of 
man,  the  varied  resources  of  nature, — and  to  regulate 
these,  not  in  accordance  with  natural  law,  but  with 
theory.  These  adherents  comprise  many  different 
classes.  Among  them  are  the  socialist,  who  would 
seize  the  fruits  of  all  human  labor  and  scatter  them 


PATERNAL    GOVERNMENT  285 

in  a  kind  of  Saturnalia;  the  advocate  of  bereditaiy 
or  class  privilege,  who  presses  others  back  in  order 
to  promote  himself ;  the  corporate  po^v•er,  assuming 
and  exei'cising  functions  of  government ;  the  pro- 
tectionist, who  contradicts  the  law  of  the  diversity 
of  nature's  gifts,  and  seeks  to  place  the  penalty  of 
tlie  contradiction  upon  others ;  the  prohibitionist, 
who  endeavors  to  make  his  rigorous  rule  of  practice 
the  rule  of  all  others ;  and  the  free-school  advocate, 
who  interferes  with  the  paternal  relation — that 
unquestionable  duty  which  parents  owe  to  their 
children — and  in  this  interference  tends  to  unify  the 
faculties  of  those  children  by  artificial  methods  mis- 
called education.  Some  of  these  instances  I  will 
endeavor  to  elaborate  in  the  following  chapters.  It 
is  in  uncompromising  opposition  to  all  these  that  the 
spii'it  of  equal  political  liberty  asserts  itself. 


CHAPTER  X 

PATERNAL    GOVERNIMENT CONTINUED 

From  the  conditions  described  in  the  preceding 
chapter  as  the  causes  of  paternalism,  we  may  by  gen- 
eralization make  such  a  definition  of  paternal  govern- 
ment, in  contradistinction  to  the  government  of 
self-dependence,  as  will  enable  us  in  this  respect,  to 
measure  the  usual  character  of  our  current  legis- 
lation. 

That  government  is  paternal  which  in  any  way 
erects  or  creates  obstacles  teudins;  to  interfere  with 
the  industrial  incentives  and  equal  political  rights  of 
the  citizen,  or  which  fails  to  prevent  the  creation  of 
such  obstacles,  or  to  remove  any  existing  ones. 

Under  this  rule  a  government  is  paternal :  first, 
when  it  supports  or  recognizes  any  political  or  in- 
dustrial class ;  as,  for  example,  when  it  supports  a 
tariff  for  protection,  because  it  thereby  necessarily 
confers  industi'ial  privileges  upon  one  class  at  the 
expense  of  another. 

Second,  when  it  permits  any  quasi-'pnhlic  corpora- 
tion to  make  discriminations  between  citizen  and 
citizen,  or  to  interfere  in  any  way  with  their  equal 
industrial  riofhts, 

286 


PATERNAL    GOVERNMENT  28/ 

Third,  when  it  exacts  contributious  from  its  citi- 
zens to  be  used  in  interfering  with  the  family  rehition, 
and  endeavoring  to  regidate  and  mould  human 
faculties ;  as  is  illustrated  in  what  is  called  the  com- 
mon-school system. 

Fourth,  when,  through  the  legislature  or  the  courts, 
it  interferes  with  the  equality  and  sanctity  of  con- 
tract, either  by  attempting  to  impart  to  the  obliga- 
tions of  the  government  the  quality  of  legal-tender, 
or  by  establishing  any  priority  of  lien  for  any  in- 
dustrial or  special  class. 

Fifth,  when  it  engages  directly  or  indirectly  in 
any  industry  in  competition  with  the  individual 
citizen,  where  the  motive  for  such  industry  is  profit. 

On  the  ether  hand,  a  government  is  not  paternal : 
first,  in  providing  for  the  supervision  and  control  of 
all  of  its  artificial  creations,  such  as  the  (//^a-s' /-public 
corporations,  whenever  the  powers  granted  to  such 
creations  may  in  any  way  affect  the  political  or  in- 
dustrial ris^ht  of  the  citizen. 

Second,  in  undertaking  to  do  those  administrative 
acts  for  the  whole  public  Avhich  may  not  be  done  by 
the  individual,  but  which  are  necessary  for  the  whole 
public  advantage,  and  which  therefore  conduce  to  the 
well-being  of  all  of  the  citizens ;  such,  for  instance,  as 
the  regulation  of  Av^eights  and  measures ;  the  coinage 
of  money  ;  the  establishment  and  support  of  the  army 
and  navy,  including  the  governmental  care  of  the  sol- 
diers and  sailors  who  have  been  disabled  in  service ; 
the  maintenance  of  the  necessary  fortifications  for  de- 


288  INDUSTRIAL   LIBERTY 

fence ;  tlie  administration  of  the  civil  service ;  and 
the  assessment  and  collection  of  taxes  for  the  support 
of  the  government. 

Thuxl,  in  providing  for  the  regulation  of  the  manu- 
facture and  sale  of  intoxicants  and  poisons ;  for  the 
prevention  of  the  adulteration  of  food ;  for  the 
preservation  of  the  peace  ;  for  the  government  of  the 
Indian  tribes ;  and  for  the  prevention  of  interference 
b}^  the  criminal  and  defective  classes  with  the  in- 
dusti'ial  and  political  right  of  the  citizen. 
•  It  Avill  thus  be  seen,  in  a  general  way,  that  what 
distinguishes  a  non-paternal  government  from  a  pa- 
ternal one  is  that  the  former  does  not  in  au}"  case 
tolerate  any  interference  with  the  equal  industrial 
incentives,  the  equal  ^wlitical  right,  or  the  freedom 
and  sanctity  of  contract  of  the  citizen  ;  while  the 
latter  not  only  tolerates  but  fosters  such  interference. 

As  I  have  already  discussed  protection  and  indi- 
cated its  paternal  character,  I  will  not,  therefore, 
consider  it  here. 

Ilaviug  also  considered  the  relation  of  the  quasi- 
public  corporation  to  the  State,  I  will  only  say  with 
reference  to  the  paternal  phase  of  it,  that  a  govern- 
ment which  permits  a  qi(asi-]^\\h\m  corporation  to  do 
anything  that  is  paternal  must  itself  be  a  paternal 
government ;  for  the  non-paternal  government  cannot 
permit  the  exercise  of  paternal  powers.  If,  then, 
there  exists  in  a  corporate  franchise  any  element  of 
paternal  power  incident  to  the  exercise  of  that  fran- 
chise, it  must  be  the  duty  of  the  non-paternal  govern- 


PATERNAL    GOVERNMENT  289 

ment  ^vllicll  created  it,  to  liold  sucli  corporation 
within  the  non-paternal  bound;  and  in  order  to  do 
this,  it  must  be  able  to  supervise  its  management. 
No  act  that  is  necessary  to  accomplish,  this  purpose 
can  be  construed  to  be  paternal,  because  the  whole 
scope  and  intention  of  such  act  is  to  prevent 
paternalism. 

I  come  now  to  consider  and  discuss  more  particu- 
larl}^  that  instance  of  paternalism,  which  is  noted 
above  as  next  in  order  to  the  two  last  mentioned, 
namely,  the  common-school  system.  I  choose  to 
discuss  this  in  order  to  show  that  in  a  free  govern- 
ment there  can  be  no  paternalism  ^vhatever,  however 
beneficent  its  aim  or  however  beneficent  its  imme- 
diate results.  I  think  it  may  be  shown  not  only 
that  wholesome  legislation  cannot  depend  upon  the 
beneficent  design  of  its  originators  ;  but  that  if  legis- 
lation is  paternal  in  its  character,  the  loftiness  of  the 
sentiment  which  inspires  it  will  not  in  the  least  de- 
gree mitigate  its  evil  political  consequences.  Indeed, 
that  a  j^olicy  which  ostensibly  promises  wholesome 
results,  but  Av^hose  ultimate  results  are  vicious,  is  far 
more  dangerous  than  one  which  bears  iniquity  upon 
its  face  ;  since  the  former  is  the  more  likely  to  receive 
general  acquiescence  and  support. 

I  know  that  it  will  seem  ungracious  to  very  many 
that  one  should  undertake  to  question  a  system 
wliicli  has  so  many  pleasing  sentiments  about  it, 
and  upon  which  there  rests  so  much  honest  hope  for 
the  future  of  the  race — a  system  which  with  many 


290  INDUSTRIAL   LIBERTY 

constitutes  a  panacea  for  all  political  and  moral  ills. 
But  ungracious  as  this  challenge  may  seem,  if  it  leads 
to  wholesome  conclusions  it  must  become  manifest 
that  it  has  seemed  ungracious  only  because  it  has  dis- 
turbed illusions.  To  determine  whether  legislation 
really  supports  and  furthers  civilization,  it  must  be 
measured  by  the  judgment  and  the  intellect,  not  by 
the  sentiments  or  the  emotions.  It  is  the  first  duty 
of  a  reformer  to  see  that  in  his  attempts  at  reforming 
any  existing  evils  his  reform  does  not  tend  to  inter- 
fere with  persistent  natural  laws.  It  is  his  duty  to 
contemplate  dispassionately  and  analytically  not  only 
those  things  which  the  })roposed  legislation  is  inten- 
ded to  achieve,  but  what  it  will  achieve — those 
remoter  issues  which  his  movement  Avill  set  up,  and 
also  the  collateral  issues  anIucIi  it  affects.  Any 
political  system,  therefore,  for  which  permanency  is 
claimed  can  only  properly  be  measured  by  taking 
into  vie^v  the  farthest-reaching  consequences  which 
we  by  any  possibility  are  capable  of  discerning. 

A  jj-reat  deal  of  the  sacredness  which  surrounds 
the  common-school  system,  in  the  minds  of  most, 
comes  from  the  assumption  that  it  is  a  process  of 
enlightenment  which  Avill,  in  some  way  or  other, 
compel  the  advance  of  civilization. 

If  this  assumption  be  not  borne  out  by  the  result- 
ant facts,  this  sacredness  must  disappear.  If  it  be 
found  upon  examination  that  the  methods  of  this 
system  are  artificial,  that  they  tend  to  unify  rather 
than  to  diversify  and  recognize  existing  diversity  in 


PATERNAL    GOVERNMENT  29 1 

the  human  intellect,  it  must  thereupon  be  admitted 
that  to  the  extent  they  do  this  at  least  they  do  not 
accomplish  a  wholesome  result.  If  tlie  general 
growth  of  civilization  does  not  depend  so  much 
upon  knowledge  derived  from  books  as  upon  in- 
dustrial traininsr  and  education  derived  from  associa- 
tion,  and  if  the  study  of  books  is  artificially  pressed 
and  does  not  of  itself  produce  a  natural  or  a  whole- 
some result  upon  the  race,  then,  judged  by  ih^  sum 
of  its  results,  the  system  is  not  answering  the  purpose 
of  those  who  support  it. 

The  objections  to  this  system  may  be  thus  indi- 
cated in  their  natural  order  :  First,  that  it  is  incon- 
sistent Avith  the  principles  of  a  free  government  to 
enforce  a  policy  which  begins  with  an  unequal 
exaction  from  the  citizen — a  policy  which  declares 
that  A  shall  be  responsible  for  the  schooling  of 
B's  offspring,  and  that  part  of  A's  industry  shall 
be  exacted  from  him  for  this  pui'pose ;  second,  that 
it  is  likewise  inconsistent  for  the  government,  by 
arbitrary  interference,  to  assume  the  father's  duty  ; 
and  third,  that  it  is  likewise  inconsistent  for  the 
government  to  seek  by  an  artificial  effort  to  unify 
those  faculties  which  nature  has  made  diverse.  The 
thesis  is  that  such  a  policy  must  in  the  sum  of  its 
consequences  deteriorate  the  freedom  and  well-being 
of  the  race. 

The  common-school  system,  in  its  influence  upon 
secular  life,  exhibits  some  points  of  close  resemblance 
to  that  influence  which  was  exhibited  in  the  province 


292  INDUSTRIAL    LIBERTY 

of  religious  life  by  the  Cliurcli,  when  the  Church 
and  the  State  were  united,  witli  this  difference,  that 
in  the  common-school  system  the  influence  which  it 
is  intended  to  exert  is  primarily  upon  the  secular 
affairs  of  life,  ^vith  the  incidental  hope  of  producing 
a  higher  quality  of  morals.  It  is  thus  secular  and 
ethical.  On  the  other  hand,  the  influence  that  the 
Church  aimed  to  exert,  was  primarily  upon  the  spir- 
itual faculties.  Each  of  these  systems,  however, 
assumed  alike  the  beneficence  of  the  end  as  a  war- 
rant for  its  existence.  This  was  the  supreme  motive 
for  their  being ;  and  their  advocates  are  equally  averse 
to  a  passionless  examination  of  the  disasters  Avhicli 
the  systems  entail.  In  the  common-school  system 
the  influence  exerted  is  upon  the  general  intellect ; 
vnth  the  Church,  the  influence  which  was  exerted 
was  upon  the  moral  and  the  spiritual  faculties.  In 
each  case  the  supreme  beneficence  of  the  motive 
is  set  forth  to  forbid  all  careful  inquiry  into  the 
methods.  The  Church,  armed  with  the  power  of 
the  State,  reasoned,  if  its  premises  be  conceded, 
with  unanswerable  logic.  It  set  forth  that  im- 
mortal life  was  of  far  more  consequence  than  the 
vanishino;  affairs  of  this  world;  that  therefore  that 
life  must  receive  the  greatest  thought  and  attention  of 
all  men,  even  to  the  exclusion  of  the  concerns  of  this 
life  ;  that  as  a  religion  was  essential  for  each  indi\'id- 
ual,  a  rigorous  creed  must  be  formulated  to  keep  the 
ignorant  from  en-or ;  that  ti'iith,  being  a  unity,  must  be 
assured  in  uniformity  and  so  accepted,  and  to  insure 


PATERNAL    GOVERNMENT  293 

this  uniformity  there  must  be  one  authority  to  enforce 
this  acceptance.  This  authority,  assumed  to  be  di- 
rect from  God,  must  be  accepted  without  (question, 
in  its  unity,  for  the  eternal  welfare  of  each  indi- 
vidual. jSTothing  can  be  more  sacred  than  the  office 
of  the  men  Avho  were  thus  to  accomplish  and  pre- 
serve this  one  faith  for  humanity.  In  the  purer 
days  of  the  Church  its  teachers  were  thoroughly  im- 
bued with  the  belief  that  they  were  the  divinely 
appointed  agents  of  Heaven  for  thus  securing  the 
highest  hope  of  the  race.  By  the  sanctity  of  their 
lives,  by  their  personal  abnegation,  they  illustrated 
the  beauty  of  this  unified  faith  ;  and  Avhen  occasion 
arose,  by  their  martyrdom  they  sealed  it  with  their 
blood.  It  is  impossible  to  conceive  of  an  ideal  higher 
than  theirs,  or  of  aims  more  beneficent.  But  their 
aims  were  false,  and  the  means  which  Avere  employed 
as  their  power  grew,  instead  of  tending  to  elevate 
the  political  condition  of  mankind,  weakened  and 
degraded  it.  Thus  the  Church  ^vith  its  authority 
made  man  a  dependant  and  not  a  freeman.  The  uni- 
form faith  which  it  exacted  in  all  details  tended  to 
make  him  but  a  part  of  a  machine.  Uniformity  in 
belief  and  in  practice  was  enforced ;  religion  became 
not  a  matter  of  individual  conviction  from  within, 
for  individual  conviction  was  intolerable,  but  some- 
thing Avhich  must  be  impressed  from  without,  and 
wliich  could  be  forced  into  uniformity  to  the  gain 
of  eternal  salvation  even  if  at  the  sacrifice  of  human 
freedom. 


294  INDUSTRIAL   LIBERTY 

No  one  who  is  acquainted  Avitli  tlie  enthusiastic 
efforts  of  the  first  leaders  of  the  free-school  move- 
ment can  doubt  the  earnestness  of  their  convictions, 
the  loftiness  of  their  purpose,  the  philanthropy  of 
their  aims.  Even  in  their  official  reports  there  is  a 
certain  verve  which  marks  them  as  enthusiasts  al- 
most to  a  spiritual  degree.  Great,  however,  as  were 
their  aims,  they  Mere  not  greater  than  those  high 
aspirations  which  characterized  the  efforts  of  the 
heroes  of  the  early  Church  and  which  tended  to 
make  man  wretched  and  degraded. 

The  world  for  ages  bore  the  yoke  of  ecclesiastical 
unity  more  or  less  submissively,  based  as  it  was  upon 
the  assumed  conditions  of  salvation.  The  processes 
for  producing  that  unity  grew  more  and  more 
exacting  as  the  authority  increased  and  took  to  itself 
those  vices  Avhich  ever  accK)mpany  the  possession  of 
power  confident  of  its  domination.  This  continued 
until  these  processes  became  intolerable.  Mankind 
came  at  last  to  realize  the  utter  injustice  of  the  situa- 
tion, notwithstanding  its  front  of  such  seeming  be- 
neficence. It  is  not  flatterino;  to  the  wisdom  of  the  race 
to  note  the  manner  in  which  this  realization  came 
about.  It  was  not  through  intelligent  examina- 
tion, but  mainly  by  dynamic  influences  that  men 
found  the  evil  results  of  Churcli  rule.  The 
maxim  long  since  learned  and  forgotten,  re- 
learned  and  then  a2:ain  forgotten :  lies  nolunt 
diu  nialadministrari,  expresses  the  eternal  fail- 
ure  of   artifice   to    work   against    nature,    and   the 


PATERNAL    GOVERNMENT  295 

disasters  wliicli  must  accompany  such  failure. 
When  the  leadinc:  countries  of  western  civilization 
realized  tlielr  condition,  they  threw  off  the  yoke. 
Taught  by  bitter  experience,  they  learned  at  length 
that,  dear  as  the  unified  faith  might  be,  essential  as 
many  still  continued  to  think  it,  all  faith  must  thence- 
forth be  treated  as  a  matter  of  individual  convic- 
tion, not  to  be  dictated  by  the  authority  of  a  coun- 
cil ;  that  the  variety  of  moral  and  spiritual  faculties 
must  be  accepted  as  a  fact,  in  order  that  greater  hu- 
man liberty  shotild  be  assured.  When  this  was  ac- 
complished, it  was  found  not  only  that  spiritual 
health  did  not  depend  upon  the  old  conditions,  not 
only  that  humanity  could  not  be  raised  by  being 
constrained,  but  that  real  moral  and  political 
health  were  one ;  that  they  could  not  exist  in  polit- 
ical slavery,  and  that  both  spiritual  and  temporal 
welfare  flourished  best  in  political  freedom, — in 
recognition  of  the  variety  of  the  moral  and  spiritual 
faculties  and  the  impossibility  of  reducing  them  to 
uniformity, 

I  say  it  took  ages  to  realize  that  freedom  was  thus 
smothered  under  the  power  of  a  hierarchy;  that 
freedom  was  thus  repressed  by  the  very  sublimity  of 
the  aims  of  that  hierarchy.  We  had  hardly  arrived 
at  tliis  realization  when,  moved  by  the  same  desire 
for  good  in  the  intellectual  held  that  the  early 
Church  had  exhibited  in  the  religious  field,  we  insti- 
tuted the  free-school  system.  Thus  we  began  to 
forget  the  great  lesson,  and  to  lose  the  high  vantage 


296  IXDUSTRIAL   LIBERTY 

ground  of  history.  The  liigli-priests  of  tlie  com- 
mon-school system  took  tlie  children  from  the  priests 
of  the  Clnuvli,  Avho  liad  been  attempting  to  cast 
men,  women,  and  children  into  a  spiritual  and 
moral  mould,  and  proceeded,  though  with  some 
modifications  of  method,  in  the  attempt  to  cast  their 
minds  in  other  artificial  moulds.  It  may  take  ages 
for  us  to  learn  that  however  desirable  true  edu- 
cation may  be,  it  can  only  properly  be  acquired  and 
can  only  promote  freedom  in  accordance  Avith  the 
law  of  freedom. 

Horace  Mann  has  been  reo:arded  as  tlie  father  of 
the  common-school  system.  He  started  with  the 
postulate,  Avhich  I  have  indicated,  that  a  system  of 
uniform  teaching,  from  uniform  books,  by  imiform 
methods,  was  necessarily  beneficial  and  civilizing. 
Having  satisfied  himself  of  the  truth  of  this  postu- 
late, he  threw  his  whole  soul  and  life  into  a  work 
Avhich,  being  thus  philanthropic,  he  believed  in  the 
end  to  be  virtuous.  He  justified  almost  every  means 
for  the  attainment  of  the  end.  He  deplored  any  at- 
tempt at  variety  of  instruction,  and  said  that  "the 
multiplicity  of  books  in  the  schools  embarrasses  all 
kinds  of  instruction."  He  said  that  ''  numey  for  the 
more  liberal  })ayment  of  teachers  Avas  to  be  Avon  from 
the  pockets  of  the  Avealthy  by  persuasion  or  exacted 
b}^  laAV."  He  expressed  the  opinion  that  existing 
school-houses  AA'^ere  insufiicient,  and  A\'ere  to  be  SAvept 
aAvay  from  the  State  by  "appeals  to  duty,  to  decency, 
to  paternal  loA^e ;  by  rebuke  or  by  ridicule ;  by  any 


PATERNAL    GOVERNMEXT  297 

means  not  absolutely  criminal/'  In  tlie  progress  of 
his  work  lie  soon  came  to  find  that  \vhat  lie  called 
liis  "  vigorous  reformatory  measures  "  aroused  oppo- 
sition ;  that  those  whom  he  designated  as  "  the  penu- 
rious "would  resist  taxation;  that  "the  slumberers 
would  beat  away  the  disturbers  of  their  peace  " ;  that 
"  the  lovers  of  caste  would  repel  the  companionship 
of  their  social  inferiors  " ;  that  "  all  malcontents  would 
unite  to  commend  the  old  as  time-hallowed  and  safe, 
and  to  condemn  the  new  as  Utopian  and  dangerous." 

One  of  the  first  discouragements  in  the  progress  of 
the  system  was  public  indiiference,  which  caused  the 
non-attendance  of  pupils.  Mann  called  this  "  a  sad 
chapter  in  the  year-book  of  the  schools."  AVhile  he 
saw  a  slight  improvement  from  year  to  year,  he 
thought  the  "  disease  "  too  chronic  and  deep-seated  to 
yield  to  anything  but  energetic  treatment,  and  en- 
tertained hope  that  a  government  which  had  passed 
quarantine  laws  to  prevent  the  importation  of  physi- 
cal disease  would  soon  advance  so  far  in  wisdom  as 
to  enact  similar  leo;islatiou  to  overcome  what  he  called 
"  the  ignorant  and  vicious  abandonment  of  children 
and  youth  " ;  and  he  maintained  that  until  this  was 
done,  it  was  the  duty  of  all  officers  connected  with  the 
cause  of  education  to  expose,  with  stern  fidelity,  the 
delinquency  of  parents  who  neglected  to  send  their 
children  to  the  schools  provided  for  them. 

Mann  was  ready  to  employ  the  power  of  the  gov- 
ernment to  carry  out  his  system,  in  its  application 
to  human  intellect,  to  its  logical  conclusions.     If  he 


298  INDUSTRIAL   LIBERTY 

had  been  possessed  of  tlie  surgical  power  necessaiy 
to  mould  human  faculty  into  exact  imity,  he 
would  have  produced  a  fine  uniformity — but  A\'hat 
would  have  become  of  civilization?  He  assumes  the 
whole  process  of  nature  to  be  artificial — the  result  of 
some  mechanism.  He  makes  this  mechanism  an  attri- 
bute of  divinity  and  says :  "  At  a  vast  distance,  but  still 
in  imitation  of  the  divine  processes,  does  man  proceed 
for  the  completion  of  every  work  of  his  hands."  He 
further  says :  "  Supposing  matter  to  have  been  created 
by  the  fiat  of  the  Almighty,  a  substantial  and  beauti- 
ful analogy  may  be  traced  between  the  methods 
pursued  by  the  Creator  and  the  creature  in  the  form- 
ation of  the  works  of  their  hands."  And  with  the 
rapt  soul  of  a  seer  he  declares  that  "  under  the  provi- 
dence of  God  our  means  of  education  are  the  grand 
machinery  by  which  the  '  yvckx  material '  of  human 
nature  can  be  worked  up  into  inventors  and  discov- 
erers, into  skilled  artisans  and  scientific  farmers,  into 
scholars  and  Jurists,  into  founders  of  benevolent  in- 
stitutions and  the  great  expounders  of  ethical  and 
theological  science." ' 

In  all  this  process  of  reasoning  he  never  endeavored 
to  work  out,  as  a  problem,  what  type  of  social  struc- 
ture this  machinery  would  ultimately  produce. 
With  the  postulate  that  artificial  education  was  a 
good  thing,  he  was  mainly  occupied  with  proximate 

'  "  Twelfth  Annual  Report  of  the  Board  of  Education  of  Massachu- 
setts,"  together  with  "  The  Report  of  the  Secretary  of  the  Board,  Boston, 
1849,"  P-  38. 


PATERNAL    GOVERNMENT  299 

results,  and  depeucled  upou  his  iniagination  to  forecast 
the  general  consequences.  His  conclusion  was  that 
if  it  were  possible  for  all  to  be  equally  educated  it 
would  be  wholesome  ;  and  by  education  he  meant  a 
23rocess  of  mind-cramming  with  unifoi'm  books,  the 
necessary  result  of  which  would  be  to  take  those 
who  were  thus  educated  away  from  the  conditions 
of  life  to  which  they  were  best  adapted.  He  failed  to 
see  that  such  an  education  of  the  masses  was  not  a 
differentiation  of  faculty,  but  tended  to  a  unification 
inevitably  hostile  to  general  progress.'  AVith  a  thor- 
ough faith  in  his  philanthropic  ideas,  he  thinks  and 
says  that  true  statesmanship  consists  "  in  organizing 
these  ideas  into  a  system  and  then  putting  that  sys- 
tem into  operation  as  a  mechanic  does  a  machine."  ^ 
The  mind  which  thus  conceived  the  effect  of  this 
system  to  be  necessarily  wholesome  because  it  was 
the  intention  that  it  should  be  wholesome,  could  not 

'  Nor  is  it  alone  with  this  leader  that  the  results  of  such  mechanical  uni- 
fication are  regarded  as  wholesome.  The  pulpit  also  creates  its  Utopias 
and  assumes  that  healthy  growth  may  arise  from  mere  beneficence  of  inten- 
tion.    Mr.  Savage,  in  one  of  his  sermons,  says  : 

"  Our  common  graded  school  system  of  to-day  starts  with  the  idea  that 
every  boy  who  begins  in  the  lowest  class  in  the  primary  department,  if  he 
follows  the  system  clear  through,  will  ultimately  land  at  Harvard.  It  is  a 
pathway  that  leads  up  through  all  the  grades,  and  is  completed  only  there. 
Now,  I  believe  it  would  be  well,  thoroughly,  grandly  well,  if  all  the  children 
could  follow  that  pathway  from  beginning  to  end."  (See  "  Social  Prob- 
lems "  by  M.  J.  Savage,  Boston,  1886,  p.  149.) 

This  seems  very  much  like  assuming  that  if  all  the  children  could  be 
more  thoroughly  schooled,  by  a  system  which  tends  towards  uniform  men- 
tal results,  mankind,  having  at  length  lost  their  diversity  of  faculty,  would 
still  remain  civilized. 

-  "  Twelfth  Annual  Report  of  the  Board  of  Education  of  Massachusetts," 
p.  37. 


300  INDUSTRIAL  LIBERTY 

possibly  be  appreliensive  of  any  danger  in  uniform 
l)Ooks  and  uniform  methods.  Such  minds  are  not 
apt  to  consider,  that  among  free  people,  exactions 
from  one  man  or  set  of  men  to  support  the 
children  of  another  man  or  set  of  men  can  have 
any  element  of  wrong  in  them,  or  that  there  can 
be  any  element  of  wrong  in  substituting  the  State's 
interference  for  the  true  paternal  duty  of  the  father 
of  the  family.  Nor  do  they  see  that  there  will 
be  likely  to  be  a  weakening  of  the  bond  of  pa- 
ternal love,  and  at  the  same  time  a  loosening  of 
the  bond  of  citizenship,  through  the  assumption 
by  the  State  of  the  father's  dnty.  jS[or  will  they 
be  likely  to  apprehend  that  in  their  "  ridicule " 
and  "  rebuke ''  of  the  father  they  are  casting  con- 
tempt upon  political  liberty.  Nor  do  they  see 
anything  wrong  in  seeking  to  bring  the  father  and 
the  child  under  the  criminal  law  for  resistins;  such 
interference  with  the  natural  and  true  paternal  re- 
lation. Mann  had  no  more  doubt  that  he  A\'as  rio-ht 
than  had  the  medijBval  priests,  and  he  was  therefore 
ready  to  assert  tlie  po"\ver  of  the  State  in  behalf  of 
his  system  and  to  exert  any  means  that,  as  he  said, 
were  not  absolutely  criminal,  just  as  the  medi;«val 
priests  employed  the  power  of  the  State  to  enforce  the 
assumptions  of  the  Church.  And  so  he  sought  to  exer- 
cise absolutism  under  the  form  of  democracy.  He 
doubtless  ^vould  have  resented  Avith  indignation  any 
imputation  of  tlie  narrowness  or  intolerance  of  Puri- 
tanism. Nevertheless  he  had  simply  rejected  the  shell 


PATERNAL   GOVERNMENT  30I 

and  was  retaining  tlie  substance.  Thus  one  may 
fancy  himself  to  be  a  freeman,  and  yet,  in  dealing  with 
his  political  equals,  possibly  unconsciously  to  himself, 
be  seeking  to  exercise  over  them  a  despotism.  AVhile 
assuming  superior  knowledge  of  the  laws  of  nature, 
he  is  thus  asserting  this  knowledge  by  a  breach  of 
those  very  laws.  A  large  degree  of  the  evil  done  in 
this  world  is  from  the  vicious  notion  of  a  sense  of 
one's  duty  to  exert  a  power  Avhich  has  no  founda- 
tion in  right,  but  for  which  a  right  is  assumed  in 
some  supernatural  Avay.  I  therefore  repeat  the  thesis, 
that  it  is  an  assumption  and  not  a  right  by  which 
a  majority  does  the  initial  wrong  of  reaching  into 
the  pocket  of  one  citizen  and  taking  part  of  the 
fruits  of  his  industry,  in  order  to  accomplish  the 
second  wrong  of  thrusting  the  arm  of  the  govern- 
ment into  the  family  of  another,  to  lift  from  his 
shoulders  the  paternal  duty ;  and  then  to  do  the  third 
wrong  of  attempting  to  substitute  for  that  paternal 
duty  the  process  of  making  the  minds  of  children 
uniform.  The  process  is  founded  in  injustice ; 
it  is  against  equal  liberty ;  it  is  against  the  funda- 
mental laAV  of  nature,  and  therefore  it  cannot  work 
a  permanent  good.  With  all  of  its  assumption  of 
beneficence  it  turns  out  to  be  a  sin  against  civiliza- 
tion. 

The  advocate  of  the  State's  control  in  the  common- 
school  system  reasons  directly  in  the  line  of  modern 
socialism.  He  cannot  logically  find  fault  with  the 
socialist,  since  between  them  there  is  only  a  differ- 


302  INDUSTRIAL  LIBERTY 

ence  of  deorree  and  not  of  kind.  Both  start  with  the 
behef  that  a  majority  in  a  free  government  has  the 
riirht  to  take  from  one  man  the  fruits  of  his  indus- 
try  and  give  them  to  anotlier  man  who  has  not 
helped  to  produce  those  fruits.  J^xacting  from  one 
citizen  the  means  to  educate  another's  child  is  only  a 
modification  of  the  process  of  exacting  from  one  to 
furnish  bread  to  another.  This  system  only  illus- 
trates the  assumption  of  the  po^ver  to  take  all  the 
fruits  of  human  industry  and  to  divide  them,  not 
in  accordance  with  the  rule  by  which  they  were 
acquired,  not  in  recognition  of  any  degree  of  skill, 
energy,  or  thi-ift,  but  by  distributing  these  fruits  to 
thrifty  and  thriftless  alike,  and  calling  such  a  dis- 
tribution an  equal  one.  It  is  a  process  which  makes 
the  government  a  huge,  mysterious,  asomatous  con- 
cern, endowed  with  omnipotence  to  accomplish  physi- 
cal and  moral  impossibilities. 

In  the  case  of  the  common-school  system,  these 
evils  are  so  hidden  that  they  are  imperceptible  to 
most  people,  and  even  when  they  are  perceived 
they  seem  to  many  to  be  greatly  overbalanced  by 
Avhat  appears  to  be  the  resultant  good.  Let  us  see 
Avhether  this  is  the  case.  If  the  father  of  a  family 
has  any  duties  of  maintenance  and  education  to  per- 
form for  his  children,  does  the  government  by  its 
artificial  interference  in  undertaking  to  perform  these 
services  for  him  improve  his  sense  of  duty  ?  Does  it 
enlarge  his  sense  of  responsibility  to  his  family  when 
it  takes  a  part  of  that  responsibility  from  his  shoul- 


PATERNAL    GOVERNMENT  303 

ders  ?  And  wliat  is,  if  possible,  more  important  to 
the  well-being  of  society,  does  tlie  artificial  education 
— given,  not  in  accordance  with  individual  adaptation, 
but  by  an  unbending  rule — necessarily  benefit  the  ob- 
ject of  solicitude,  the  person  assumed  to  be  educated  ? 
AVhen  the  recipient  of  this  mis-education  is  sent  forth 
into  the  ^vorld,  if,  as  is  surely  not  impossible,  he  is 
educated  to  a. distaste  for  the  work  Avhich  lies  about 
him,  is  it  to  be  ^v"ondered  at,  that  he  should  look  to 
the  government  for  further  assistance  ?  Has  he  not 
some  sort  of  warrant  for  his  expectation  that  the 
government  which  has  already  extended  personal 
assistance  mil  continue  it?  If  this  government 
has  made  him  less  capable  of  doing  for  himself,  Avhy 
should  it  not  furnish  to  him  an  occupation  congenial 
to  tastes  which  it  has  created  in  him  \  Or  else,  why 
should  it  not  furnish  to  him  the  means  of  subsistence, 
since  it  has  made  him  less  capable  of  finding  them 
for  himself  ?  Then  why  should  it  not  seize  the  fruits 
of  industry  with  the  same  paternal  hand  by  which  it 
before  seized  part  of  them,  and  make  a  ue^v  distri- 
bution ?  Wherever,  as  Mann  puts  it,  "  under  the 
providence  of  God  our  means  of  education  are  the 
grand  machinery  by  which  the  '  raw  material '  of 
human  nature  is  worked  up,"  these  means  are  a  ma- 
chinery set  in  motion  to  bring  out  a  more  or  less  arti- 
ficial product.  AVhile  the  industrial  incentive  may 
be  stimulated  by  some  element  of  discontent  in  the 
individual's  existing  condition,  yet  there  is  a  point  at 
which  discontent  produces  nothing  but  hopelessness. 


304  INDUSTRIAL  LIBERTY 

There  are  kiucls  of  artificial  edueatioD,  therefore, 
wliicli  defeat  their  object;  and  those  which  aim 
at  uniformity  are  of  such  kinds.  Place  a  man  by 
such  education  face  to  face  ^Yith  what  is  unattain- 
able to  him  and  he  is  educated  away  from  his 
natural  aptitudes.  You  have  taken  from  him  the 
ambition  to  acquire,  and  have  thus  given  him  a 
burden  to  carry  with  him  through  life.  You  may 
make  a  tramp  or  a  wild  theorist  of  him;  but  the 
work  of  life  for  \v'hich  he  was  fitted  by  nature 
remains  undone  so  far  as  he  is  concerned.  Instead 
of  being  a  producer,  he  becomes  only  a  consumer; 
instead  of  a  promoter,  he  becomes  an  interrupter 
of  civilization.  He  adds  to  the  number  of  those 
"who  surcharge  the  activities  instead  of  increasing 
them.  These  are  but  some  of  the  results  of  the 
artificial  procrustean  method;  and  even  if  we  as- 
sume that  such  methods  of  instruction  may  be  im- 
proved by  adaptation  to  the  individual  case,  yet 
there  are  fatal  vices  which  still  remain  in  the  system. 
The  principles  of  equal  justice  and  equal  liberty  are 
violated  in  the  exaction  by  wliich  the  system  comes 
into  being,  and  by  mari'ing  incentive  through  per- 
formance by  the  government  of  a  duty  \vliich  belongs 
to  the  individual.  These  principles  cannot  be  taught 
in  any  school  created  by  government  aid,  because 
there  is  a  necessary  violation  of  them  in  the  very  es- 
tablishment of  the  system  which  produces  sucl 
school.  The  true  incentive  of  the  freeman  can  never 
be  cultivated  where  self-dependence  is  violated  by 


PATERNAL    GOVERNMENT  305 

taking  the  duty  from  the  shoulders  of  hiiu  who 
should  perform  it  and  placing  that  duty  where  it 
does  not  belong.  As  long,  therefore,  as  the  common- 
school  system,  even  under  any  refoi'matiou  that  may 
be  made  in  its  educational  methods,  remains  a  State 
system,  exacting  the  fruits  of  labor  and  marring  the 
incentive  both  of  the  parent  and  of  the  citizen  who 
is  taxed  to  school  the  parent's  child,  it  cannot  be 
wholesome,  for  it  necessarily  mars  that  which  Car- 
lyle  has  aptly  called  the  highest  of  all  human  posses- 
sions :  Self-help.  In  view  of  all  this  negation  it  may 
natui'ally  be  asked  :  "  Is  education  to  be  abandoned  ? 
Are  the  children  to  be  permitted  to  grow  up  in  ig- 
norance ?  Are  the  neo;roes  with  their  defective  sense 
of  duty  to  be  left  to  themselves  to  go  backwards  ?  " 
But  the  answer  to  it  all  is  that  real  education  in  a 
free  State  must  necessarily  rest  upon  the  fundamental 
principles  of  freedom,  the  equal  right  of  the  individ- 
ual, and  the  preservation  by  the  consensus  of  free- 
men of  the  equal  incentives  of  life.  It  is  by  his 
surrounding  conditions  that  each  man  is  individually 
stimulated  to  emulate  his  neighbor,  and  not  by  legis- 
lative mandate,  not  by  any  artificial  process  which 
undertakes  throu2:h  mechanism  to  make  him  as  2:ood 
as  his  neighbor.  It  is  the  conditions  about  him 
which  move  him  to  skill,  and  the  incentive  cannot  be 
supplied  by  any  other  means.  Similarly  it  is  his  sur- 
roundings which  stinnilate  a  man  to  better  education. 
The  motives  which  impel  the  individual  to  this  ac- 
complishment arise  from  a  disposition  to  better  his 


3o6  INDUSTRIAL  LIBERTY 

position.  They  are  spontaneous ;  tliey  come  from 
^vitliin.  They  arise  from  his  sense  of  necessity — 
imparting  to  him  an  ambition  to  advance  his  chil- 
dren beyond  his  o^vn  accomplishment,  and  yet  in 
this  advancement  to  preserve  the  paternal  relation. 
No  artificial  means  can  supply  this  motive.  The 
only  source,  therefore,  to  which  we  can  look  for  the 
impro\'ement  of  the  race  through  education  or  any 
other  means  is  that  which  comes  from  the  effort  of 
the  parent,  promoted  by  his  surroundings,  in  behalf 
of  his  child.  Here  the  gro^vth  is  healthful ;  it  is 
based  upon  the  principles  of  a  free  government  and 
upon  the  natural  relation  of  parent  and  child.  It 
may  be  helped  by  the  suggestion  or  pei'suasion  of 
others,  or  it  may  arise,  as  I  have  said,  from  the 
necessities  of  surrounding  circumstances — those  great 
agents  of  spontaneous  growth, — but  no  man-made 
system  can  create  or  force  it,  and  the  whole  office  of 
a  free  government  is  fulfilled  in  preserving  the  sur- 
roundino-  conditions  in  accord  with  natural  laws. 
ISTo  man  can  have  his  incentive  stimulated  by  the 
eifort  of  the  government  to  do  that  for  him  \vhich  it 
is  his  first  duty  as  a  citizen  to  do  for  himself.  Not 
only  can  normal  incentive  not  be  thus  stimulated, 
but  it  can  never  be  created  by  go\'ernmental  com- 
pulsion. 

When,  then,  the  advocate  of  the  modern  education- 
al methods  says,  for  instance :  '*As  we  have  given 
the  negro  his  freedom,  we  must  therefore  take  charge 
of  his  education,"  the  proper  answer  ^vould  seem  to 


PATERNAL    GOVERNMENT  307 

be  that  the  neoTo  lias  not  received  his  freedom  so 
loug  as  any  part  of  the  people,  under  the  authority 
of  the  government,  coddle  him  with  paternal  care ; 
that  he  can  only  have  his  freedom  when  he  has  equal 
right  assui'ed ;  that  it  is  only  a  freedom  to  him  when 
it  is  freedom  to  do  for  himself,  and  that  this  cannot  be 
assured  by  the  assumption  of  any  superior  political 
right  to  control  or  direct  him,  even  though  such  con- 
trol or  direction  be  intended  for  his  advantage.  By 
the  amendment  to  the  Constitution  the  negro  was 
brought  ^vithin  the  terms  of  the  common  agreement 
for  political  equality.  It  is  for  all  the  parties  to  that 
agreement  to  see  that  this  equality  is  recognized,  as 
well  on  account  of  the  negro  as  for  its  preserva- 
tion to  all. 

When  such  advocate  undertakes  to  point  out  what 
we  owe,  the  natural  inquiry  is,  who  are  the  "  we  " 
upon  whom  this  assumption  of  duty  rests  ?  So  far 
as  can  be  discerned  the  term  designates  a  set  of  peo- 
ple who  fancy  that  those  who  are  called  "  the 
masses  "  are  in  some  way  their  wards ;  that  they  have 
a  duty  derived,  not  from  the  common  agreement, 
but  from  Heaven,  by  which  they  assume  to  make 
these  "  masses "  think  and  act  not  for  themselves, 
but  in  certain  lines  j)i'6scribed  by  their  assumed 
political  superiors.  It  is  this  class  constituting  the 
"  we  "  who  took  the  neo-ro  after  the  war  and  under- 
took  to  keep  him  under  a  kind  of  servitude  by  pro- 
tecting him  through  a  paternal  government;  who, 
presumably  for  his  own  good,  sought  to  teach  him 


308  INDUSTRIAL   LIBERTY 

dependence  upon  the  government  for  everything 
and  dependence  upon  himself  for  little  or  nothing  ; 
with  the  utmost  benevolence  of  motive  they  undertook 
to  make  for  him  a  social  ecpiality  by  enacting  a  law 
for  this  purpose.  They  established  a  bank  for  him, 
which  collected  his  earnings,  and  permitted  them 
to  be  abstracted.  They  threw  around  him  artificial 
conditions  which  prevented  him  from  realizing  that  he 
must  depend  upon  himself  to  establish  his  freedom. 
They  sought  to  make  him  vote  properly, — which 
meant  that  he  should  vote  as  they  would  have  him ; 
and  whenever  he  resented  this  effort,  they  tabooed 
him  as  an  ingrate.  They  sent  well-meaning  citizens 
to  live  A\dth  him  and  educate  him  into  dependence. 
Just  as  the  sense  of  duty  arose  in  their  breasts, 
their  views  of  his  true  freedom  declined.  When  at 
last,  after  rej^eated  efforts  followed  by  failure,  the 
Southern  States  were  thrown  upon  themselves  to 
work  out  their  problem  as  self-governing  republics, 
the  f  reedman's  condition  underwent  a  change.  AVhilst 
it  nuist  be  confessed  that  in  many  respects  he  has  not 
obtained  his  full  right ;  that  there  are  many  instances 
in  which  he  has  fared  illy  enough  in  his  efforts  at 
self-preservation  and  self-dependence,  nevertheless,  I 
think  no  one  can  make  a  dispassionate  comparison 
between  his  condition  under  the  paternal  hand  of  the 
government  and  that  condition  which  has  existed  since 
this  paternalism  ceased,  without  concluding  that  what- 
ever acts  of  injustice  have  been  committed  against 
him,   his  condition  has  improved  and  that  he  has 


PATERNAL    GOVERNMENT  3O9 

steadily  moved  toAvards  self-dependence  tlirougli  the 
lifting  of  tlie  hand  of  the  paternal  government 
from  him.  Thrown  upon  his  own  resources,  there 
was  nothing  for  him  but  to  depend  upon  himself,  and 
vA\h.  the  spirit  of  self-dependence  that  has  therefore 
grown  he  has  gained  largely  in  individual  freedom. 
His  value  as  a  citizen  is  far  better  appreciated  both 
in  its  political  and  in  its  industrial  aspects,  the  rec- 
ognition of  his  political  rights  is  far  more  vivid  than 
when  the  government  undertook  to  direct  his  indus- 
tries and  to  create  for  him  social  rights.  This  growth 
is  exhibited  everywhere  in  the  strength  of  the  negro 
himself ;  and  it  constitutes  one  of  the  most  pregnant 
comments  upon  the  failure  of  governmental  pater- 
nalism. 

Not\vithstanding  the  failure  which  has  character- 
ized this  paternalism,  notwithstanding  the  bettered 
condition  of  the  freedman,  the  superserviceable 
efforts  at  his  protection  have  not  ceased.  They  still 
continue  in  the  effort  to  employ  the  surplus  which 
has  been  exacted  from  the  industries  of  the  nation,  in 
the  pursuit  and  enlargement  of  this  false  system  of 
education.  The  effort  is  but  an  example  of  the  dispo- 
sition of  paternalism  to  return  to  the  field  of  its  past 
failure,  to  pursue  in  a  modified  form  those  means 
which  in  the  past  have  produced  results  the  very 
opposite  to  those  Avhich  were  intended. 

Turning  to  statistics  we  may  observe  that,  so  far 
as  they  can  be  taken  to  indicate  the  influence  of  the 
common-school  system  upon  the  moral,  the  physical, 


3IO  INDUSTRIAL  LIBERTY 

and  the  industrial  growtli  of  the  country,  they  are 
not  reassuring.  I  do  not  mean  to  say  that  all  \\\\- 
toward  results  are  chargeable  to  the  common-school 
system ;  most  evils  are  to  be  attributed  to  mixed 
and  multiplied  causes.  Nevertheless,  as  this  system 
has  been  direct  and  potent  in  the  artificial  moulding 
of  the  hinuan  faculty  within  the  past  fifty  years,  I 
think  it  may  fairly  be  said  that  if  in  that  time  there 
has  been  a  continued  lowerins:  of  the  standard  of 
civilization,  a  part  of  the  responsibility  for  the  prog- 
ress in  this  direction  must  be  attributed  to  it.  If 
there  has  been  a  marked  increase,  in  the  proportion 
of  idiots  and  insane  to  the  proportionate  gTowth  of 
population  noticeable  in  those  States  in  which  the 
free-school  system  was  most  extensively  organized 
and  operated,  a  j^art  at  least  of  the  fact  of  this  growth 
may  a2:)propriately  be  attributed  to  the  influence  of 
this  system.  If  there  has  been  a  notable  increase  of 
discontent  in  the  industrial  field,  any  artificial 
condition  which  would  tend  to  produce  disturbance 
of  the  normal  incentives,  which  ^vould  tend  from  its 
qualities  to  produce  discontent,  -woidd  probably  have 
its  share  of  responsibility  for  that  discontent ;  and 
when  the  State  has  by  a  system  culti\'ated  dependence 
instead  of  clearing  away  the  hindrances  to  self-help, 
it  is  reasonable  to  expect  to  find  in  statistics  some  of 
the  effects  of  this  process.'     In   i\  natural  order  of 

Mr.  Joseph  B.  Marvin,  of  Washington,  makes  the  following  deductions 
from  an  examination  of  the  United  States  censuses  from  1850  to  18S0  : 

"Comparison  of  the  statistics  of  the  defective  and  delinquent  classes  in 
the  United  States  for  the  period  from  1S50  to  iSSo  with  the  statistics  of 


PATERNAL    GOVERNMENT  311 

things  it  is  necessity  ^vliicli  stimulates  man  to  labor, 
and  when  this  necessity  is  removed  by  the  State,  the 
stimulus  ceases  to  operate.  The  same  law  which  in 
indiscriminate  alms-giving  tends  to  increase  pauper- 
ism, also  operates  in  causing  all  artificial  efforts  which 
interfere  ^vith  incentive  to  produce  a  deterioration  of 
it.  We  have  for  some  time  been  slowly  coming  to 
realize  that  distributing  doles  indiscriminately  to  the 
poor  tends  to  the  creation  of  professional  paupers ;  but 
^ve  have  not  yet  come  to  realize  fully  this  same  ten- 
dency as  applicable  to  what  we  call  education.  AVe 
are  apt  to  fancy  that  the  same  law  does  not  prevail 
in  both  cases;  but  this  is  because  in  the  latter 
instance  its  operation  is  more  indirect.  It  does 
operate,  however,  and  if  more  insidiously  and  indi- 
rectly, all  the  more  dangerously  and  at  last  the  more 
potently  on  that  account ;  and  it  is  \\dth  a  view  to 
show  this  working  that   I  present  these  statistics. 

the  public  schools  for  the  same  period,  discloses  a  certain  distinct  and 
uniform  reciprocal  relation  between  the  number  of  defective  and  delinquent 
classes  and  the  number  of  public-school  attendants. 

"  During  the  period  from  1850  to  1880  the  school  attendance  a  little  more 
than  doubled,  while  the  number  of  defective  persons — idiots,  insane,  blind, 
and  deaf-mutes — was  five  times  as  great  in  1880  as  in  1850. 

"  In  New  England,  where  the  ratio  of  school  attendance  has  been  the 
largest,  the  ratios  of  defective  and  delinquent  classes  have  been  the  largest. 

"  Although  the  ratio  of  the  defective  classes  to  the  population  is  still  the 
greatest  in  the  New  England  States,  yet  this  ratio  has  only  trebled 
during  the  thirty  years  between  1850  and  1880,  while  it  has  quad- 
rupled in  certain  Western  and  Southern  States  where  the  ratio  of 
attendance  in  the  public  schools  has  increased  most  rapidly  in  that  period. 

"  The  ratio  of  idiots  and  insane  to  the  population  is  greater  in  the  State 
of  Vermont  than  in  any  other  State  in  the  Union. 

"  The  ratio  of  paupers  is  greatest  in  New  Hampshire. 

"  The  ratio  of  criminals  in  prison  is  greatest  in  Massachusetts." 


312  INDUSTRIAL    LIBERTY 

The  poor  girl  ^\■llOse  capacities  and  tastes  tend  to 
make  lier  an  efficient  servant  for  the  household,  can- 
not justly  be  educated  to  play  the  piano,  since  such 
education  only  tends  to  give  her  a  dislike  for  earning 
her  livelihood ;  in  place  of  incentive,  it  produces 
inaptitude  and  discontent;  and  it  is  repeated  in- 
stances of  this  Avhich  tend  to  swell  the  volume  of 
existing  discontent.  We  may  reasonably  look  to 
statistics  to  indicate  these  violations  of  principle. 

I  am  well  a^vare  that  conclusions  derived  from  a 
comparison  or  contrast  between  the  census  of  one  dec- 
ade and  that  of  another  are  not  to  be  unreservedly 
accepted.  One  who  has  taken  an  important  official 
part  in  gathering  government  statistics  tells  us  that 
not  all  statistics  are  to  be  relied  upon  ;  that  there  is 
a  class  of  facts  \vhich,  from  the  nature  of  things, 
can  rarely  be  ascertained  with  accuracy.  He  places 
those  which  relate  to  physical,  mental,  and  moral 
conditions  in  this  class.'  I  am  aware,  too,  that  it 
has  been  shown  that  in  the  State  of  Massachusetts 
the  statistics  of  important  criminal  institutions  com- 
prised in  one  census  were  not  comprised  in  another, 
a  circumstance  which  led  to  mistakes  by  those  who 
have  endeavored  to  make  deductions  by  comparison. 
There  is  another  class  of  statistics  which  is  derived 
from  a  record  of  some  of  the  State  penitentiaries, 
showing    the    characteristics,    extent    of     common 

'  "  Problems  of  the  Census,"  an  address  before  the  American  Social 
Science  Association,  by  Carroll  D.  Wright,  President  of  the  Association, 
Saratoga,  Dec.  5,  1887. 


PATERNAL    GOVERNMENT  313 

school iug,  antecedents,  and  occupations  of  the  pris- 
oners. There  is  some  inadecpiacy  doubtless  in 
the  usual  deductions  from  these  also,  due  to 
the  fact  that  the  data  in  themselves  are  not 
sufficient  to  sho^v  -svith  exactness  the  influence  of 
schooling  upon  the  criminal  classes,  because  in  order 
to  show  this  accurately  it  would  be  necessary  to 
know  the  proportion  which  exists  in  the  State  be- 
tween the  schooled  and  the  unschooled.  These  sta- 
tistics are,  notwithstanding  this,  important  as  show- 
ing the  proportion  of  convicts  Avho  have  learned 
trades  and  the  proportion  who  have  attended  public 
and  private  schools ;  and  in  this  respect,  it  seems  to 
me,  the  figures  are  both  impressive  and  signifi- 
cant. The  criminals  in  the  State  penitentiaries  are 
likely  to  represent  fairly  the  general  criminal  class ; 
and  the  statistics  concerning  them  are  likely  to  indi- 
cate some  of  the  influences  of  educational  method:*  in 
this  connection.  The  reports  from  the  Eastern  Peni- 
tentiary of  Pennsylvania  seem  to  furnish  more  com- 
plete and  detailed  information  than  those  of  any 
other  penitentiary  in  the  country,  and  it  is  to  these 
therefore  that  I  Avill  mainly  refer.  The  report  of 
the  Board  of  Insj^ectors  of  this  penitentiary  for 
1886,  says: 

"  Of  the  552  convicts  received  during  the  year,  373  had 
attended  public  school,  104  attended  private  school,  and 
75  had  never  attended  any  school. 

"Of  the  552  convicts  received,  39  had  acquired  trades 
by  apprenticeship,   10  were    apprenticed  but  left  before 


314  INDUSTRIAL   LIBERTY 

time  expired,  and  503  were  unapprcnticed.  Of  the  503 
unapprenticed,  62  learned  trades  by  working  at  them, 
making  lOi  who  were  in  possession  of  trade,  and  partially 
instructed  in  handicraft  knowledge,  leaving  451  entirely 
ignorant  of  any  trade  knowledge.  Of  the  537  males  re- 
ceived, 299  were  idle  at  the  time  of  arrest. 

"  This  examination  will  disclose  the  ver}'  large  number 
of  young  persons  convicted  of  crime.  It  will  also  show 
the  number  sent  to  '  public  schools,'  to  private  schools, 
and  those  also  who  never  attended  any  school. 

"  Of  the  whole  number  of  persons  convicted  under  25 
years  of  age,  few  had  been  instructed  in  a  trade. 

"  When  it  is  known  that  in  the  city  of  Philadelphia  a 
million  and  a  half  of  dollars  are  yearly  expended  for  public 
schools,  it  is  extraordinar}-  that  no  carefully  prepared  sys- 
tem for  teaching  the  hand  is  established,  while  so  much  is 
disbursed  for  mental  instruction. 

"From  January  i,  1877,  to  December  31,  1886 — ten 
years — there  were  received  from  Philadelphia  County 
1,160  convicts  who  were  25  years  of  age  and  under. 

"  Of  the  1,160  received,  911  attended  public  school,  103 
attended  private  school,  and  146  never  attended  any 
school. 

"Of  the  1,160  received,  136  had  trades  by  apprentice- 
ship, or  working  at  them;  1,024  had  no  knowledge  in 
handicraft. 

"Of  the  1,160  received,  832  were  idle  at  the  time  of 
arrest."  ' 

This  Board  of  Inspectors,  in  another  of  their  re- 
ports, say : 

1  "  Fifty-seventh  Annual  Report  of  the  Inspectors  of  the  State  Peniten- 
tiary for  the  Eastern  District  of  Pennsylvania,"  Philadelphia,  iS86,  pp.  4,  5, 
and  6. 


PATERNAL    GOVERNMENT  315 

"  The  young  convicts  who  have  acquired  what  is  called 
a  plain  education  in  schools,  but  have  no  trade  knowledge 
or  training,  are  yearly  increasing  in  number.  This  is  a 
startling  exhibit.  It  invites  the  most  serious  considera- 
tion. It  is  manifest  that  efforts  must  be  made  to  prevent 
it.  It  opens  for  the  reflection  of  the  sociologist  grave 
questions, — so  grave  as  to  demand  inquiry  into  the  real 
causes  that  produce  these  results. 

"That  this  is  by  no  means  a  new  question,  arising  out 
of  crude  thought,  or  from  occasional  connection  with 
some  branch  of  crime  treatment,  the  annexed  extracts 
from  the  report  of  the  penitentiary  are  given. 

"  The  report  for  the  year  1876  contains  the  following  : 

"  The  number  of  unapprenticed  but  educated  young 
men,  educated  so  far  as  what  is  called  popular  education 
instructs  those  who  receive  it,  who  were  sentenced  for 
crime  to  this  prison  during  the  three  years  1874-5-6,  is  so 
utterly  disproportioned,  that  it  may  be  surmised  that 
*  school  education '  does  not  teach  the  use  of  trade 
knowledges."  ' 

I  liave  given  these  statistics  for  the  purpose,  more 
than    anything   else,   of   sho^ving    the    contrast   be- 

'  "  Fifty-first  Annual  Report  of  the  State  Penitentiary  for  the  Eastern 
District  of  Pennsylvania,  for  the  Year  1880,"  Philadelphia,  pp.  26  and  27. 

The  reports  for  other  prisons,  although  not  so  complete  as  those  for 
Pennsylvania,  so  far  as  they  exhibit  the  details,  indicate  the  same  condition 
of  things. 

Thus,  of  the  1,494  convicts  in  the  prison  of  Joliet,  111.,  151  are  classed  as 
illiterate,  while  129  are  college  graduates,  and  1,087  have  fair  education  : 
127  can  read  but  not  write. 

In  the  Minnesota  prison,  out  of  235  prisoners  received,  1S5  had  no 
trade,  while  only  35  were  reported  as  illiterate. 

Iowa  has  recently  reported  489  convicts,  305  of  whom  had  no  trade 
knowledge,  348  of  whom  had  common  schooling,  and  only  53  of  whom 
were  illiterate. 


3l6  INDUSTRIAL   LIBERTY 

t\veeu  tlie  cliaracter  of  the  promises  ^^-llicll  the  origi- 
nators of  the  system  made  for  it  and  the  manner  of 
f  ulfihnent  of  those  promises  in  the  practical  workings 
of  the  system  after  fifty  years  of  trial ;  and  conceding 
them  to  be  inconclusive  in  themselves,  I  do  not  de- 
pend on  them  as  the  basis  for  my  argument  against 
the  system,  but  regard  them  merely  as  incidental  to 
an  examination  of  the  theory  of  the  structure. 

Mann  promised  at  the  beginning  that  his  system 
would  produce  a  diffusion  and  equality  of  the  fruits 
of  industry  and  the  establishment  of  political,  social, 
moral,  and  intellectual  well-being.  He  promised 
with  srreat  confidence  that  ^^^th  the  connnon-school 
sj^stem  in  active  and  successful  operation  "the  dark 
host  of  vices  and  public  crimes  which  now  embitter 
domestic  peace  and  stain  the  civilization  of  the  age 
might  in  ninety- nine  cases  out  of  every  hundred  be 
banished  from  the  ^vorld."  He  describes  a  state  of 
affairs  where  institutions  of  learning  and  religion  are 
reverenced  ;  where  falsehood,  detraction,  and  perjuiy 
are  never  uttered ;  where  neither  intemperance  nor 
the  guilty  knowledge  how  to  prepare  its  means  nor 
the  guilty  agents  to  diffuse  them  are  known ;  where 
all  the  obligations  growing  out  of  domestic  relations 
are  sacredly  kept ;  where  offices  always  seek  the  wis- 
est and  best  men  for  incumbents  and  never  fail  to 
find  them  ;  where  witnesses  are  true  and  jurors  just ; 
in  fine,  where  all  men  are  honest  in  their  dealings  and 
exemplary  in  their  lives,  "  with  the  exception  of  here 
and  there  an  individual  who  fi-om  the  rareness  of  his 


PATERNAL   GOVERNMENT  31/ 

appearance  would  be  regarded  almost  as  a  mon- 
ster." '  He  describes  this  as  a  condition,  whicli  in  the 
opinion  of  "  our  most  intelligent,  dispassionate,  and 
experienced  teachers  "  could,  in  the  course  of  two  or 
three  generations,  and  through  the  instrumentalities 
of  good  teachers  and  good  school  superintendents, 
substantially  be  realized. 

For  fifty  years  his  system  has  been  in  existence ;  it 
has  had  an  ever-widening  application  and  an  ever- 
increasing  support  from  the  taxes  of  the  23eople.  The 
most  significant  statements  of  its  present  condition 
in  brief  are  those  of  the  superintendents  of  education 
in  several  of  the  States  where  the  system  has  been 
longest  in  existence  and  is  most  actively  employed. 
One  of  these  is  from  the  report  of  the  secretary  of 
the  State  Board  of  Education  of  Connecticut.  His 
statement  is  evidently  not  made  with  the  view  of 
showing  the  failure  of  the  system,  but  simply  as  a 
narration  of  facts.  The  most  significant  import  of 
these  facts,  if  we  may  judge  from  the  context,  is  not 
realized  even  by  the  writer.     He  says  : 

"  In  every  town  of  this  State  there  are  children  growing 
up  in  ignorance  and  vice  who  have  failed  to  receive  the 
minimum  schooling  which  the  law  requires.  There  are 
very  many  more,  as  the  statement  with  regard  to  attend- 
ance shows,  who  attend  irregularly  and  with  little  advan- 
tage to  themselves  and  with  positive  injury  to  the  school. 
There  is,  even  where  schools  are  attractive,  continuous, 
and  efficient,  the  most  astonishing  indifference,  develop- 

'  "  Twelfth  Annual  Report  of  the  Board  of  Education,  together  with  the 
Twelfth  Annual  Report  of  the  Secretary  of  the  Board,"  Boston  1849,  P-  9'^- 


3l8  INDUSTRIAL   LIBERTY 

ing  into  evasion,  where  gain  can  be  made  from  the  labor 
of  the  children.  These  sixteen  years  of  trial  and  work 
under  a  so-called  compulsory  law  have  not  educated  the 
people  who  need  education  to  the  necessity  of  every-day 
training  in  school.  The  principle  has  been  lauded,  but 
practice  has  been  wanting. 

"  Even  in  the  very  quarter  in  which,  through  vigorous 
persuasion  and  action  of  the  efficient  State  agent,  a  meas- 
ure of  success  has  been  secured,  a  serious  drawback  has  de- 
veloped. Most  of  those  who  desire  to  work  attend  school 
three  months  in  order  to  be  able  to  secure  employment, 
and  for  no  other  reason.  .  .  .  Such  a  grave  weakness 
in  our  education  machinery  may  well  fill  every  mind  with 
alarm,  for  it  points  to  the  unhappy  conclusion  that  the 
children  are  losing  their  rights  and  the  tax-payers  wasting 
their  money." 

I  do  not  believe  the  author  of  this  means  to 
convey  the  idea  that  the  children  are  losing  their 
rio:hts  in  the  sense  that  their  freedom  is  beins:  taken 
away  from  them,  or  in  the  sense  that  they  are  being 
made  poorer  citizens  by  the  influence  of  the  system ; 
for  it  is  evident  that  he  ingenuously  infers  that  these 
children  are  losins;  their  I'iohts  in  not  beino;  dealt 
A\dth  by  a  more  strict  police  authority.  It  is  evident 
that  he  does  not  realize  that  the  remedies  which  he 
suggests  lie  in  the  direction  of  the  luc^uisition. 

The  Superintendent  of  Public  Instruction  for  the 
State  of  New  York,  in  his  report  for  the  year  ending 
August  20,  1886,  says  : 

"  From  the  data  in  our  possession  it  seems  that  59  per 
cent,  of  the  school  i)opulation  attended  the  public  schools. 


PATERNAL    GOVERNMENT  319 

at  some  time  during  the  year  ;  in  1880  it  was  62  percent., 
and  in  1870  it  was  69  per  cent.  The  average  attendance, 
taking  the  entire  year  together,  was  36  per  cent,  of  the 
children  of  school  age;  in  1880  it  was  35  per  cent.,  and 
in  1870  it  was  32  per  cent.  The  average  time  each  child 
attended  school  during  the  last  year  was  22.  i  weeks ;  in  1 880 
it  was  20.4  weeks,  and  in  1870  it  was  17.6  weeks.  From 
these  figures  it  is  apparent  that  while  the  children  who  do 
attend  the  schools  come  with  greater  regularity  than 
formerly,  still  the  whole  number  who  attend  the  schools 
for  some  period  of  the  year  in  proportion  to  the  whole 
number  of  school  age  has  been  growing  smaller  since 
1870,  notwithstanding  the  'Compulsory  Education  Act  ' 
enacted  in  1874.  .  .  .  It  is  believed  that  these  figures 
are  reliable,  with  perhaps  this  exception  :  There  has  been 
no  census  since  1880,  and  the  number  of  children  of 
'school  age'  reported  since  that  time  has,  undoubtedly, 
in  some  cases,  been  estimated.  The  estimate  cannot, 
however,  be  far  out  of  the  way." 

I  have  heretofore  said  in  discussing  the  corporate 
power  and  the  theory  of  protection,  that  whenever 
legislation  creates  an  institution  which  is  in  essential 
antagonism  to  equal  political  freedom,  it  becomes 
necessary  in  support  of  that  institution  to  call  into 
beinf*;  other  lemslative  creations  for  the  continued 
maintenance  of  the  artificial  conditions.  This  is  the 
only  sense  in  which  paternalism  may  properly  be 
called  progressive.  Nothing  is  more  logical  than 
this  kind  of  supplementary  work ;  nothing  lies  more 
directly  in  the  line  of  cause  and  effect ;  and  nothing 
better  illustrates  the  inherent  vices  of  paternalism. 
In  a  retrospect  of  the  free-school  system,  we  notice 


320  INDUSTRIAL   LIBERTY 

that  in  its  earlier  stages,  when  it  was  met  by  an  in- 
stinctive resentment  on  the  part  of  the  individual, 
and  therefore  failed  as  a  spontaneous  development, 
the  next  logical  step  lay  in  the  direction  of  compul- 
sor}'  legislation.  This  has  been  in  force  for  some 
time.  In  many  of  the  States,  as  it  fails  to  perform 
its  office,  we  find  recommendations  for  additional 
enactments  in  the  compulsory  direction.  An  instance 
of  this  is  shown  in  the  following  statement,  made  by 
the  Superintendent  of  Public  Instruction  for  the 
State  of  New  York.     In  his  report  for  1886,  he  says : 

"  If  we  are  to  believe  the  word  of  other  States  which 
have  preceded  us  in  grappHng  with  the  problem  here  pre- 
sented, a  State  reform  school  to  which  the  most  flagrant 
cases  might  be  sent  would  have  a  wholesome  moral  influ- 
ence upon  the  first  class  above  spoken  of,  and  a  system  of 
free  text-books  would  materially  lessen  the  number  of  ab- 
sentees consequent  upon  the  indifference  of  parents.  The 
legislature  once  passed  a  bill  providing  for  a  State  reform 
school  for  truant  children,  which  failed  to  become  a  law 
because  of  the  objections  of  the  Governor."  ' 

Upon  this  point  the  following  suggestions  are 
made  by  the  same  superintendent : 

"  (i)  That  provision  be  made  for  the  annual  enumera- 
tion of  all  the  children  of  school  age  in  the  State.  (2) 
That  the  laws  for  compulsory  education  be  fully  revised, 
and  some  officer  designated  in  each  town  to  see  that  they 
arc  strictly  enforced." 

'  From  the  report  of  Hon.  A.  S.  Draper,  Superintendent  of  Public  In- 
struction, New  York,  for  the  year  ending  August  20,  1SS6,  contained  in  the 
"  Report  of  the  Commissioner  of  Education,"  Washington,  1887,  p.  43. 


PATERNAL    GOVERNMENT  321 

It  w  ill  thus  be  seen  that  the  whole  system  is  grad- 
ually being  transferred  to  the  police  department  of 
the  government,  and  will  finally  owe  its  existence  to 
the  enforcement,  under  the  criminal  code,  of  penal- 
ties fixed  upon  the  performance  of  the  duties  grow- 
ing out  of  the  natural  relation  between  parent  and 
child/ 

It  has  frequently  been  noticed  that  one  of  the  chief 
unto\\ard  results  of  the  influence  of  steam  and  ma- 
chinery in  modern  civilization  consists  in  the  repres- 
sion and  loss  of  individuality.  Whilst  there  is  no 
doubt  that  this  is  in  a  great  measure  true,  and  that 
such  repression  is  unquestionably  a  misfortune,  it  is 
certainly  a  greater  misfortune  that  instead  of  endeav- 
oring to  counteract  this  tendency  by  intelligent  means 
we  are  aiding  it  by  other  artificial  agencies.  There  is 
not  wanting  e\'idence  that  the  very  great  change  which 
has  taken  place  in  the  German  character — a  change 
which  inclines  the  German  towards  socialism,  and 
which  has  been  so  progressive  in  the  last  fifty  years — 
is  due  to  the  compulsory  and  rigorous  military  and 
educational  methods  to  which  the  youth  of  Germany 

'In  New  York  the  acts  of  1S74  and  1876  require  attendance,  but  no 
effective  steps  have  been  taken  to  enforce  these  laws.  See  U.  S.  Commis- 
sioner's Report  for  1877,  p.  175  ;  also  for  1885-86,  p.  33. 

California  enacted  a  compulsory  law  in  1874  ;  Connecticut  in  1882  ;  Illi- 
nois in  1883  ;  Maine  in  1875  \  Massachusetts  in  1873  ;  Michigan  in  1871, 
repealed  it  in  1S81,  and  re-enacted  it  in  1S83  ;  New  Hampshire  in  1S71  ; 
New  Jersey  in  1S74 ;  Ohio  in  1877  ;  Vermont  in  1867  ;  Wisconsin  in  1S73. 
There  is  also  a  compulsory  law  in  Rhode  Island,  the  date  of  which  is  not 
given.  (See  U.  S.  Commissioner's  Report  for  1882-83,  p.  xxx.,  and  Report 
for  1885-86,  p.  150.) 


322  INDUSTRIAL  LIBERTY 

are  subjected  ;  and  that  the  decrease  of  individual- 
ity exhibited  in  France  is  due  to  a  like  cause.  The 
French  nation  never  had  that  degree  of  individual 
vio'or  which  has  characterized  the  Teutonic  and  the 
Ano^lo-Saxon  races  for  a2:es,  and  the  course  of  circum- 
stances  in  France  has  tended  to  the  deterioration  of 
the  little  they  had.  Church  and  State  together  sub- 
dued the  individual.  At  the  be2:inniuo^  of  the  French 
Kevohition  the  peoj^le  knew  nothing  but  that  they 
were  miserable.  Their  individuality  was  so  com- 
pletely broken  down,  that  when  they  came  to  express 
opposition  it  was  not  by  a  revived  individualit}',  but 
through  that  Avhich  Taine  calls  a  "  spontaneous  anar- 
chy "  '  coming  from  a  homogeneous  mass.  AVhilst,  as 
I  have  before  said,  the  Anglo-Saxon  race  has  more 
vitality  and  individuality  than  any  other,  it  is  not 
impossible  that  a  course  of  systematic  repression  of 
this  individualit)^  may  accomplish  its  destructive  re- 
sult in  time;  for  the  Anglo-Saxon's  individuality, 
great  as  it  is,  has  of  necessity  its  limit.  We 
should  ask  ourselves  \\diether,  in  testing  the  ca- 
pacities of  the  race  to  assimilate  as  we  are,  other 
races  which  come  as  immigrants  to  our  country,  we 
are  not,  by  the  mechanism  of  the  common-school 
system,  impairing  our  capacity  to  bear  the  required 
strain. 

We  can  easily  believe  that  a  Romanist,  living 
during  the  early  stages  of  the  Reformation,  accus- 
tomed as  he  was  to  the  workings  of  a  unified  faith 

'  "  History  of  tliu  l'"iciuli   Revolution,"  by  II.   A.   Tainc,  vol.  I.,  chap.  I. 


PATERNAL    GOVERNMExWT  323 

Lauded  down  from  his  fathers,  and  preserved  by 
the  central  authority  of  the  Church,  beheld  with  the 
utmost  horror  what  to  him  seemed  to  be  the  lapse 
of  humanity  into  spiritual  chaos,  arising  from  the 
surrender  of  this  faith  to  individual  conviction.  He 
could  not  bring  himself  to  conceive  that  his  truth 
could  be  any  other  than  a  unit,  or  that  any  concession 
to  individual  conviction  could  be  any  other  than  a 
spiritual  degradation.  Similarly  the  firm  believer  in 
the  common-school  system  looks  upon  it  with  a  like 
reverence,  and  therefore  regards  any  eifort  to  mod- 
ify it  in  the  direction  of  individual  freedom,  as 
tending  towards  unquestioned  political  and  moral 
degradation.  He  believes  in  ^^rtue,  but  he  has  no 
confidence  in  any  guard  for  virtue  in  which  he  has 
not  a  hand.  As  it  was  heresy  to  believe  that  so 
sacred  a  thing  as  truth  should,  in  compliance  with 
political  freedom,  be  left  to  be  governed  by  indi\'id- 
ual  judgment,  just  so  it  is  doubtless  heresy  to  the 
advocate  of  the  common-school  system  to  believe 
that  education  should  be  left,  in  compliance  wdth 
the  same  political  freedom,  to  be  governed  by  indi- 
vidual incentive  and  the  sense  of  paternal  responsi- 
bility. The  mode  of  reasoning  is  precisely  the  same 
in  the  two  cases ;  it  began  with  the  Romanist  in 
the  assumption  that  his  dogma  was  all  there  was  of 
truth,  that  it  was  the  only  truth,  and  that  it  could 
have  no  error  in  it.'     The  advocate  of  the  common- 

'  There  are  those  who  found  their  faith  in  the  common-school  system 
upon  a  dread  of  the  encroachments  of  Romanism.     Whilst  it  is  doubtless 


324  IXDUSTRIAL    LIBERl^Y 

sctool  system  assumes  it  to  be  tlie  oue  true  system, 
and  asserts  that  there  can  be  no  possible  error  in  it. 
Each  has  thus  with  the  same  assumption  justified 
his  ends.  As  we  have  seen,  when  the  assumption 
of  the  nnity  of  spiritual  faith,  born  of  the  authority 
of  the  Church,  was  utterly  broken  do^\n,  thereupon 
freedom,  both  secular  and  religious,  received  a  new 
impetus,  and  a  new  and  enlarged  civilization  re- 
sulted. So  it  seems  to  me  that  when  the  artificial 
methods  Avhich  interfere  Avith  the  incentives  of  life, 
with  the  natural  family  relation,  shall  be  abolished, 
^ve  shall  experience  a  like  enlargement  of  moral, 
industrial,  and  political  freedom,  and  a  still  better 
civilization.  But,  in  order  to  take  this  step,  we  will 
have  to  realize  \o\\  easy  it  is  to  mar  the  incentives 
of  a  child  by  the  application  to  his  mind  of  artificial 

well  for  a  people  aiming  to  be  free  that  they  be  jealous  of  any  religious  in- 
stitution which  tends  towards  proselyting  the  citizen,  and  leading  him  from 
the  principles  of  freedom,  it  cannot  be  a  logical  step  for  such  a  people  to 
seek  to  counteract  these  evil  tendencies  by  imitating  the  methods  which 
prevail  in  the  obnoxious  organizations.  The  chief  means  by  which  the 
downfall  of  Romanism  in  England  was  accomplished  were  the  seculariza- 
tion of  the  Church  and  of  politics,  and  the  institution  by  this  secularization 
of  methods  of  free  thought,  which  were  entirely  opposed  to  the  paternal 
authority  of  the  Romish  Church.  The  most  efficient  means  possible  for 
overcoming  any  untoward  growth  of  that  Church  to-day,  are  those  which 
cultivate  the  individuality  of  the  citizen  ;  and  these  means  cannot  be  effec- 
tively employed  whilst  there  exists  an  organization  which  systematically 
represses  this  individuality.  Romanism  must  always  be  cxpec;Jed  to  make 
its  least  progress  in  a  country  where  the  paramount  idea  consists  in  guard- 
ing the  individual  freedom.  It  is  far  less  likely  to  flourish  in  a  free  coun- 
try, kept  free,  than  in  any  conditions  where  its  methods  of  authority  are 
imitated.  The  effort  to  form  the  human  faculty  and  the  effort  to  form  the 
human  conscience  originate  in  the  same  notion  of  authority,  and  they  are 
alike  out  of  accord  with  the  principles  of  individual  liberty. 


PATERNAL    GOVERNMENT  325 

methods  imadapted  to  those  incentives ;  how  easy  it 
is  to  produce  by  such  means  a  discontent  with 
one's  lot  in  life  ;  hoAV  much  easier  it  is  for  all  of  us 
to  fall  into  habits  of  indolence  and  thriftlessness  than 
to  acquire  those  of  industry  and  thrift ;  and  ^^^e  will 
have  therefore  to  realize  that  no  rigorous  rule  can  be 
made  \\diich  will  be  suited  to  diverse  capacities ;  that 
we  can  no  more  depend  upon  a  ]  )aternal  government, 
and  an  artificial  method  for  the  accomplishment  of 
a  wholesome  secular  education,  than  ^ve  formerly 
could  depend  upon  the  paternal  hierarchy  for  the 
accomplishment  of  spiritual  welfare.  The  ultimate 
attainment  of  a  civilization  must,  of  necessity,  I'est 
at  last  upon  the  recognition  of  the  individual  right, 
and  of  the  fact  that  all  incentive  grows  from 
within,  and  cannot  be  created  by  enactment;  that 
we  cannot,  in  the  effort  to  maintain  the  standards 
of  life,  expect  artificial  agencies  to  create  the  moral 
initiatiN^e ;  that  we  cannot  disregard  the  more  po- 
tent influences  of  surrounding  circumstances  upon 
character;  that  ^ve  can  depend  no  more  upon  a  pa- 
ternal government  for  freedom  than  we  formerly 
could  upon  a  paternal  hierarchy.  I  confess  there  is 
no  fair  prospect  for  immediate  or  near  realization  of 
this  hope.  While  no  array  of  statistics  nor  any  argu- 
ment from  principal  could  ever  have  convinced  the 
early  Romanist  to  whom  I  have  referred,  that  the 
concession  of  individual  i*ight  in  matters  of  belief 
was  anything  other  than  a  surrender  of  all  that  was 
sacred  and  true,  so  no  aiTay  of  statistics  nor  any  ar- 


326  INDUSTRIAL   LIBERTY 

gument  from  principle  can  be  expected  to  convince  the 
advocate  of  tlie  common-school  system  that  a  depend- 
ence upon  individual  freedom  with  the  consequent 
diffusion  of  incentive  for  the  sup[)ort  of  such  freedom 
is  the  only  basis  for  normal  growth.  This  system 
is  too  deeply  rooted  in  the  minds  of  the  people,  as 
was  unified  faith  under  ecclesiastical  domination ; 
and  it  is  therefore  altogether  likely  that  we  shall 
have  to  await  its  removal  by  dynamic  influences 
similar  to  those  which  broke  do^^ai  forever  the  su- 
preme authority  of  the  Church  of  Rome. 


CHAPTER  XI 

PATERNAL    GOVERNMENT CONTINUED 

Continuing  in  tlie  order  wliicli  I  marked  out  at 
the  beginning  of  tlie  last  chapter,  I  will  briefly  notice 
those  instances  of  ^paternalism  which  have  their  origin 
in  the  interference  by  legislatures  and  courts  with 
the  freedom  and  sanctity  of  contract. 

The  constituents  of  a  contract  are  certain  and  con- 
stant, and  in  all  contracts,  whether  of  a  public  or  a 
private  nature,  there  inhere  the  following  elements : 
first,  the  proposal  and  acceptance ;  second,  the  presence 
of  either  form  or  consideration ;  third,  the  capacity  of 
the  parties  to  make  the  contract ;  fourth,  the  genuine- 
ness of  their  consent ;  and  fifth,  the  legality  of  the 
object  which  the  contract  pi'oposes  to  affect/  In  other 
words,  these  essential  qualities  may  be  thus  ex- 
pressed :  first,  the  parties  intending  to  contract  must 
be  able ;  second,  they  must  be  willing ;  third,  they 
must  actually  contract ;  fourth,  there  must  be  a  con- 
sideration, express  or  implied ;  and  fifth,  the  sub- 
ject matter  of  their  agreement  must  come  within  the 
limits  of  public  policy, — the  public  policy  being 
mainly  a  guard  against  immoralities  and  perpetui- 

'  Sir  William  Anson,  "  The  Law  of  Contract,"  Oxford,  1886,  p.  10. 

327 


328  INDUSTRIAL  LIBERTY 

ties.     Thus  the  power  to  contract  in  a  free  govern- 
ment imports  tlie  riglit  of  citizens  to  make  agree- 
ments with  one  anotlier  in  reference  to  they'  Lawful 
possessions  or  services,  unrestrained  except  by  a  clear 
and  definite  public  policy,  and  the  sanctity  of  contract 
includes  the  right  to  enforce  performance  of  the  agree- 
ments so  made  or  to  obtain  compensation  for  violation. 
The  freedom  for  industrial  contract  in  a  free  State 
exists  equall}',  witliout  distinction  of  person  or  class, 
to  all  w^ho  are  w^ithin  the  industrial  field.    When  this 
right  is  preserved  equally  to  each  individual  citi- 
zen, a  fundamental  basis  of  industrial  liberty  is  estab- 
lished, and  the  equal  incentive  of  industrial  libei'ty  is 
maintained.     This  is  the  brief  of  the  freedom  of  con- 
tract; and  the  preservation   of  this  freedom  unim- 
paired necessarily  includes  the  preservation  of  its 
sanctity.     These  elements  cannot  be  created ;  they  do 
not  exist  only  because  a  legislative  or  judicial  body 
enacts  or  defines  them  ;  they  owe  their  real  being  to 
natural  economic  laAvs.     They  arise  out  of  the  con- 
ditions which  inhere  in  the  idea  of  agreement :  as  a 
thing  made  by  free  consent  without  duress  or  inter- 
ference ;  made  by  those  w^ho  have  unchallenged  right 
in  the  subject-matter,  the  obligations  of  which,  once 
entered  into,  cannot  be  discharged  otherwise  than  by 
performance  or  by  common  consent.     Legislative  at- 
tempts to  interfere  with  the  operation  of  this  freedom, 
and  judicial  decisions  which  interrupt  it,  do  not  anni- 
hilate the  principle.     It  is,  however,  only  when  judi- 
cial decision  and  legislation  conform  to  these  natural 


PATERNAL    GOVERNMENT  329 

laws  that  their  normal  operation  is  secured.  Upon 
examining  existing  statutes  and  decisions  with  refer- 
ence to  their  influence  upon  tlie  contractual  right,  we 
find  that  law  makers  and  judges  have  sometimes 
sought  to  impart  this  freedom  and  sanctity  to  certain 
legislative  creations  which  they  have  called  con- 
tracts, but  which,  measured  by  this  definition,  are 
not  and  cannot  be  such ;  and  that  conversely  they 
have  withheld  this  freedom  and  sanctity  from  certain 
conventional  structures,  which,  whether  they  call  or 
refuse  to  call  them  contracts,  are,  by  this  defini- 
tion entitled  the  sanctity  and  freedom  belonging 
to  contracts. 

Keeping  the  definition  in  mind,  I  will  endeavor 
to  use  it  first  to  measure  those  certain  legislative 
enactments  which  are  assumed  to  be  contracts  but 
which  by  the  definition  are  not,  and  therefore  are  not 
entitled  to  the  freedom  which  belongs  to  the  making 
of  a  contract,  or  to  the  sanctity  which  should  mark 
its  obligation ;  and  thereafter  I  will  endeavor  to  dem- 
onstrate that  certain  agreements  which  according  to 
the  definition  are  contracts  have,  by  mistaken  Judicial 
decisions,  been  denied  the  sanctity  which  properly 
belongs  to  them. 

A¥hen  questioned  upon  the  subject  the  average 
American  citizen  mil  usually  say  without  reserve 
that  his  government  is  based  upon  the  sovereignty  of 
the  people.  No  statement  is  more  common ;  and  yet 
he  cannot  mean  what  he  says  with  all  that  it  imports, 
since  in  practice  he  is  constantly  approving  acts  which 


330  INDUSTRIAL    LIBERTY 

radically  contradict  this  statement — acts,  in  fact, 
^vbicll  tend  to  deteriorate  this  sovereignty.  The 
common  notion  of  sovereignty  must  therefore  be 
something  of  an  abstract  idea  rather  than  a  percep- 
tion of  a  principle  of  action,  and  I  think  it  may  be 
shown  that  both  our  Judicial  decisions  and  our  legis- 
lative enactments  indicate  the  considerable  preva- 
lence in  the  higher  circles  of  thought  of  this  abstract 
view,  and  the  corresponding  neglect  of  the  concrete. 
For  instance,  nothing  is  more  common  in  discussing 
the  relations  of  the  State  to  the  ^?<^«s/-public  corpora- 
tion than  the  citation  of  that  clause  of  the  Constitu- 
tion which  forbids  the  State  to  pass  law^s  impairing 
the  obligation  of  contract.  It  is  almost  universal  to 
speak  of  these  <^i/ as /-public  corporations  as  holding 
their  charters  from  the  State  as  contracts ;  and  yet, 
examining  them  in  the  light  of  the  definition  I  have 
given,  they  will  be  found  to  possess  none  of  the  con- 
stituent elements  of  contract. 

The  relation  of  the  leo-islator  to  his  constituents 
is  essentially  a  relation  of  trust ;  he  is  not  the 
owner  of  the  sovereignty  which  he  exercises.  He 
cannot  assign  any  part  of  that  sovereignty ;  he 
cannot  therefore  erect  an  artificial  being  and  deal 
with  it  as  an  equal ;  he  cannot,  for  industrial  purposes, 
construct  an  artificial  being  and  make  ^vitli  it  a  con- 
tract which  confers  any  part  of  the  functions  of  the 
the  government.  When,  therefore,  he  grants  a  fran- 
chise for  commercial  convenience,  he  grants  it  subject 
to  this  sovereignty.     Such  a  grant  cannot  be  a  con- 


PATERNAL    GOVERNMENT  331 

tract.  The  relation  between  a  sovereign  people  and 
a  corporation  as  holder  of  the  franchise,  so  far  from 
having  any  element  of  contract  as  between  equals, 
is  essentially  the  relation  of  the  creator  to  the  created, 
— the  master  to  the  servant ;  and  just  so  far  as  the 
service  to  be  performed  is  important  or  delicate,  just 
in  the  degree  that  it  touches  the  sovereign  master's 
right,  it  must  be  subjected  to  the  more  constant 
surveillance.  When  a  railway  charter  is  given,  this 
relation  necessarily  subsists,  necessarily  because  the 
charter  is  given  for  the  well-being  of  the  creator,  and 
the  duty  of  inspection,  of  guarding  the  master's 
well-being,  is  imperative  as  a  duty  upon  the  repre- 
sentative of  the  sovereim  creator. 

o 

The  corporation  is  not  a  natural  person ;  it  is  not 
an  individual  citizen ;  it  has  no  existence  until  it  is 
created  by  legislative  enactment ;  it  comes  into  being 
Avitli  its  charter.  Granting  that  when  once  created 
it  is  endowed  with  certain  powers  for  certain  pur- 
poses ;  that  among  these  there  is  the  power  to  con- 
tract with  individuals,  with  other  corporations,  or 
with  its  sovereign  creator,  still  this  power  only  arises 
after  its  creation,  and  it  is  a  power  which  is  neces- 
sarily so  limited  that  it  cannot  interfere  with  the 
230wer  and  right  to  which  it  owes  its  being — the 
power  and  right  of  the  individual  sovereign.  The 
theory,  therefore,  that  a  corporate  charter  is  a  con- 
tract, must  rest  upon  the  assumption  that  its  creator 
in  the  very  act  of  calling  it  into  being  is  contracting 
with  it.  Such  an  assumption  would  make  the  pro- 
cess a  species  of  legislative  miracle. 


332  INDUSTRIAL  LIBERTY 

The  practical  consequences  which  have  followed 
this  construction  of  the  charter  as  a  contract  have 
been  \\'ell  illustrated  by  tlie  history  of  the  railway 
management.  These  consequences,  as  we  have  seen, 
have  involved  the  subversion  of  the  sanctity  of  indi- 
vidual contract  which  the  Constitution  particularly 
aimed  to  guard.  If  it  be  the  theory  that  the  corpo- 
rate power  shall  be  exercised  within  the  bound  of 
individual  right ;  and  that  whenever  it  exceeds  this 
bound  the  proper  remedy  shall  be  by  declaration  of 
forfeiture,  this  theory  does  not  and  cannot  change 
the  fact  of  railway  aggression ;  nor  is  it  one  which 
in  practice  affords  an  available  remedy.  Instances 
of  flagrant  abuse  in  corporate  management  abound, 
whilst  nothing  is  more  rare  than  the  successful 
forfeiture  of  a  charter  for  abuse  of  corporate  power ; 
and  this  rarity  exists  for  the  reason  that  such  for- 
feiture is  impracticable,  partly  because  of  interven- 
ing vested  interests,  and  partly  because  the  charter 
Avhich  is  treated  by  its  lioldei's  as  a  private  interest 
so  lono:  as  it  is  claimed  to  be  a  contract  with  the 
State,  comes  to  be  claimed  as  a  public  necessity  in 
defence  to  any  effort  at  forfeiture,' 

'  As  I  have  elsewhere  shown,  the  power  conferred  by  the  States  upon 
railways  necessarily  places  the  corporation  in  a  position  where  it  may  inter- 
fere with  the  individual  right— with  the  freedom  of  the  citizen  ;  and  there 
is  no  remedy  provided  by  the  promise  that  the  courts  will  annul  railway 
charters  when  they  interfere  with  this  individual  freedom,  since  it  is  an  es- 
sential power  of  the  railway  companies  that  they  may  make  their  own 
commercial  contracts,  and  in  making  them  may  make  discriminations,  not 
as  a  matter  of  right,  but  as  a  matter  of  fact.  Indeed,  it  is  often  the  case 
that  a  contract  which  may  be  entirely  allowable  at  one  point  or  under  one 
set  of  circumstances  for  the  reason  that  it  does  not  interfere  with  the  indi- 


PATERNAL    GOVERNMENT  333 

Practically,  tlierefore,  if  an  artificial  structure, 
sucli  as  the  ^^^<2s^-public  corporation,  dictates  terms 
to  vast  industries,  distributes  population,  deter- 
mines the  relation  between  tlie  producer  and  con- 
sumer, changes  this  relation  at  its  own  will  and 
for  its  own  interest,  and  often  in  disregard  of  the 
interests  and  in  derogation  of  the  contracts  between 
buyer  and  seller — between  the  individual  citizens, 
— if  it  can  hold  this  power  by  the  same  sanction 
by  which  the  Constitution  intends  the  sovereign  in- 
dividual to  hold  his  fundamental  light  to  liberty 
in  contract,  then  it  is  idle  to  say  that  the  provision 
of  the  Constitution  which  forbids  the  State  to  im- 
pair the  obligation  of  private  contract  has  any  vital 
force  left  in  it. 

There  are  not  a  few  who,  apprehensive  of  the 
disastrous  results  of  corporate  aggression,  and  con- 
ceivino;   these    agressions   to  be  the  result    of  too 

vidual  right,  at  another  point  or  under  different  circumstances  may  be  en- 
tirely objectionable  because  it  does  interfere  with  tuch  right.  The  history 
of  the  railway  management  of  the  United  States  is  replete  with  instances  of 
the  evil  arising  from  this  fact.  That  histor}'  is  also  replete  with  evidence 
that  a  forfeiture  of  the  charter  does  not  constitute  a  remedy.  The  neces- 
sity for  the  railway  as  a  public  convenience  makes  the  forfeiture,  even 
where  it  occurs,  only  the  opportunity  for  another  management  to  come  into 
power.  Experience  has  .shown  that  the  new  management  will  be  likely  to 
follow  the  course  of  its  predecessor  in  the  use  of  its  power,  except,  per- 
haps, warned  by  the  forfeiture  of  its  predecessor,  its  aggressions  will  be 
more  insidious.  The  forfeiture  of  the  charter,  therefore,  in  the  rare  in- 
stances where  it  has  occurred,  only  invites  greater  secrecy  and  suggests 
more  covert  methods  for  accomplishing  the  purposes  which  originally  pro- 
voked the  forfeiture.  The  latest  instance  of  the  failure  of  an  effort  to 
effect  the  forfeiture  of  a  charter  is  shown  in  the  case  of  the  Broadway  Rail- 
way. 


334  INDUSTRIAL   LIBERTY 

great  freedom  of  contract,  believe  that  the  remedy  for 
all  existino;  evils  lies  in  the  restriction  of  that  free- 
dom.  It  seems  to  me  that  no  theory  could  be  more 
mistaken  than  this.  The  political  and  industrial 
freedom  of  the  individual  can  never  be  assured  by 
placing  it  in  bonds.  The  remedy,  therefore,  cannot 
lie  in  placing  a  limit  to  the  freedom  of  real  contract ; 
but  it  does  lie  in  retaining  complete  control  over 
those  artificial  structures  which  the  State  has  created, 
and  ^vhich  are  constantly  seeking  to  over-ride  the  in- 
dividual risfht.  The  error  of  the  reformer  who  ^vould 
seek  to  limit  the  freedom  of  contract  lies,  therefore, 
in  assuming  that  an  artificial  structure  created  by  the 
sovereignty  can  be  permitted  to  interfere  with  the 
individual  sovereign.  It  would  seem  to  be  the  better 
reasoning  to  construe  the  constitutional  provision  as 
a  guard  for  what  it  specifically  declares — the  con- 
tract— the  sanctity  of  individual  right ;  and  to  hold 
that  a  corporation  under  this  construction  shall  not 
be  permitted  to  exercise  any  power  ^vhereby  the 
right  of  the  citizen  is  invaded ;  that  the  charter  of 
such  corporation  is  for  service  and  convenience ;  and 
that,  inasmuch  as  this  charter  confers  large  and 
necessary  power  for  the  furtherance  of  this  serv- 
ice and  this  convenience  —  power  which  unre- 
strained is  likely  to  be  used  aggressively, — the 
sovereigns  who  grant  this  power  owe  it  to  them- 
selves, owe  it  to  the  constituent  sovereigns,  that 
it  shall  be  guarded  and  regulated  as  a  trust  for  equal 
right. 


PATERNAL    GOVERNMENT  335 

I  do  not  believe  tliere  is  a  more  pregnant  in- 
stance to  be  found  anywhere  where  a  guard  provided 
by  the  Constitution  for  the  preservation  of  a  prime 
essential  of  individual  freedom  has  been  transferred 
to  an  artificial  body,  and  used  by  that  body  to  the 
detriment  of  the  very  liberty  which  that  guard  was 
intended  to  support.  It  looks  like  the  irony  of  fate  that 
the  5"</;«s^-public  corporation,  which  has  in  our  com- 
merce been  made  the  greatest  engine  for  interference 
with  the  freedom  and  sanctity  of  private  contract, 
owes  its  immunity  to  a  construction  of  the  constitu- 
tional ]3rovision  which  was  intended  to  preserve  the 
obligation  of  individual  contract.  In  metaphor  the 
corporation  may  be  said  to  have  entered  the  citadel  of 
individual  right,  and  appropriated  the  armor  of  free- 
dom, under  cover  of  which  it  practises  its  tyranny. 

The  state  of  affairs  which  I  have  indicated  as  the 
result  of  the  treatment  of  corporate  charters  by  the 
courts  has  arisen  from  the  case  of  Dartmouth  College 
vs.  Woodward,  decided  by  the  Supreme  Court  of  the 
United  States,  and  commonly  known  as  the  Dart- 
mouth College  Case.'  The  misapplication  of  the 
fundamental  principles  of  the  law  of  contract  to  the 
facts  before  the  court  in  this  case,  and  the  further 
circumstance  that  this  decision  has  been  cited  in 
subsequent  cases  as  an  authority  for  positions  which 
it  does  not  sustain,  have  brought  about  the  solecism 
to  which  I  have  made  reference.  In  this  way  there 
has  been  established  a  construction  which  tends  to  a 

'  Dartmouth  College  vs.  Woodward,  4  Wheat.,   518, 


33^  INDUSTRIAL  LIBERTY 

continual  violation  of  that  sanctity  of  private  contract 
wliicli  the  original  decision  was  meant  to  support.' 

It  was  definitely  set  forth  as  early  as  the  reign  of 
Edward  I.  as  part  of  the  confirmation  of  the  Great 
Charter,  and  as  a  principle  by  which  the  nation 
bound  that  monarch,  that  "that  which  touches  all 
shall  be  allowed  of  all, — the  law  that  binds  all,  a 
tax  that  is  paid  by  all,  the  policy  that  affects  the 
interest  of  all,  shall  be  authorized  by  the  consent  of 
all."^  From  that  date  party  politics  took  a  new 
form.  Definitely  as  this  was  thus  set  forth,  how- 
ever, it  was  not  then  fully  realized  ;  it  is  not  yet  fully 
realized.  Nevertheless  it  constitutes  the  basis  of  the 
contract  relation  and  of  liberty ;  and  it  is  in  contra- 
diction to  this  that  the  Dartmouth  College  case  has 
been  made  the  corner-stone  upon  which  rests  the 
whole  structure  of  aggression  that  has  grown  up  in 
the  railway  corporation. 

I  have  thus  indicated  the  consequences  of  an  eifort 
to  clothe  with  all  the  qualities  of  a  contract  that 
which  according:  to  the  definition  is  not  one.     We 

'  Daniel  Webster  made  the  leading  argument  in  this  case  in  behalf  of 
the  College.  According  to  one  of  his  biographers,  the  argument,  able  as  it 
was,  was  perhaps  the  most  emotional  act  of  his  life.     His  biographer  says : 

"  Great  lawyer  as  he  undoubtedly  was,  he  felt  on  this  occasion  that  he 
could  not  rely  on  legal  argument  and  pure  reason  alone.  Without  appear- 
ing to  go  beyond  the  line  of  propriety,  without  indulging  in  a  declamation 
unsuited  to  the  place,  he  had  to  step  outside  of  legal  points  in  a  freer  air, 
where  he  could  use  his  keenest  and  strongest  weapons,  appeal  to  the  court 
not  as  lawyers,  but  as  men  subject  to  passion,  emotion,  and  prejudice. 
This  he  did  boldly,  delicately,  successfully,  and  thus  he  won  his  case." 
(See  "Daniel  Webster,"  by  Henry  Cabot  Lodge,  Boston,  1886,  p.  gi.) 

''Stubbs'  "Constitutional  History  of  England,"  vol.  II.,  p.  5 


PATERNAL    GOVERNMENT  HJ 

liave  now  to  look  at  two  instances  of  the  opposite 
character,  namely,  the  effort  by  judicial  decision  and 
legislative  enactment  to  treat  that  which  falls  S23e- 
cifically  within  the  definition  of  contract  as  not  en- 
titled to  its  sanctity  ;  and  an  instance  of  this  we  find 
in  another  decision  of  the  Supreme  Court  of  the 
United  States. 

On  the  third  of  March,  1884,  that  Court,  without 
any  public  argument  in  the  case,  pronounced  a  de- 
cision which  is  doubtless  destined  to  become  of  very 
great  public  importance,  the  gist  of  which  is  set 
forth  in  these  words : 

"  The  power  to  make  the  notes  of  the  government  a 
legal  tender  in  payment  of  private  debts  being  one  of  the 
powers  belonging  to  sovereignty  in  other  civihzed  nations, 
and  not  expressly  withheld  from  Congress  by  the  Constitu- 
tion, we  are  irresistibly  impelled  to  the  conclusion  that 
the  impressing  upon  the  Treasury  notes  of  the  United 
States  the  quality  of  being  a  legal  tender  in  payment  of 
private  debts  is  an  appropriate  means,  conducive  and 
plainly  adapted  to  the  execution  of  the  undoubted  powers 
of  Congress." ' 

Mr.  George  Bancroft  has  written  a  monograph 
upon  this  decision,  in  which  he  arrays  the  authority 
of  the  framers  of  our  Constitution,  and  of  the  fa- 
thers of  the  republic  in  support  of  his  trenchant  criti- 
cism upon  its  baleful  effect.  In  a  characteristic 
sentence,  speaking  of  the  decision,  he  says  : 

"  The  opinion  thus  confidently  expressed,  if  it  be 
accepted  as  a  law,  would  be  a  death-blow  to  the 

'  Juilliard  vs.  Grcenman,  no  U.  S.  R.,  p.  421. 


338  INDUSTRIAL   LIBERTY 

Constitution;  in  defiance  of  wliicli  it  not  only  gives 
a  sanction  to  irredeemable  paper  money,  but  clothes 
the  government  with  powers  that  liave  no  defined 
limit  in  its  relations  Avith  the  people."  ' 

If  this  clear  and  vigorous  arraignment  has  any 
warrant  in  it,  it  is  diflicult  to  conceive  of  a  decision 
more  unfortunate  than  this.  While  Mr.  Bancroft 
views  and  discusses  the  case  in  its  bearing  upon  the 
question  of  preserving  the  medium  of  exchange,  I  pro- 
pose to  touch  upon  its  larger  phase  as  involving  the 
principle  of  sovereignty  and  the  relation  of  that 
principle  to  the  sanctity  of  contract.  The  decision 
of  the  court  specifically  rests  upon  two  postulates : 
the  first  of  which  is  that  the  sovereignty  of  the  Fed- 
eral Grovernment  is  to  be  ascertained  by  the  sovereign- 
ty belonging  to  the  other  civilized  nations ;  and  the 
second,  that  a  power  not  expressly  withheld  from 
Congress  by  the  Constitution,  may  be  exercised  by 
it.  Under  the  first  of  these  it  is  obvious  that  the 
Court  in  taking  a  foreign  warrant  for  its  finding, 
could  not  have  been  mindful  of  the  injunction  of 
Chief -Justice  Marshall :  "  We  must  never  forget 
that  it  is  a  constitution  Ave  are  expounding."  No 
foreign  sovereignty  can  have  any  true  analogy  to 
sovereignty  as  established  by  the  American  Con- 
stitution. Our  sovereignty  was  intended  to  be 
a  human  sovereignty  created  by  an  agreement.  It 
can    have    no  quality    of   fiat    in   it.     Fiat    is    only 

'  "  A  Plea  for  the  Constitution  of  the  U.  S.  of  America,  Wounded  in  the 
]Iouse  of  its  Guardians."     New  ^'ork,  iSS6.     p.  6. 


PATERNAL    GOVERNMENT  339 

pretended  in  that  kind  of  sovereignty  whicli  comes 
from  tlie  assumption  of  divine  right ;  and  even  there 
it  can  only  be  pretended,  for  it  is  not  within  the 
reach  of  any  power  ^vhatever,  however  absolute  it 
may  assume  to  be,  to  make  a  promise  take  the  place 
of  performance, — whether  such  a  promise  is  from 
the  State  to  the  people,  or  is  contained  in  agreements 
between  citizen  and  citizen.  Natural  law  is  not  to 
be  thus  defeated ;  nor  can  the  assumed  superiority 
to  the  obligation  of  a  promise  be  so  justified.  I  do 
not  mean  to  say  that  the  Supreme  Court  may  not 
declare  what  it  has  in  eif  ect  declared  ;  viz.,  that  the  per- 
formance of  a  contract  can  be  indefinitely  postponed. 
It  may  even,  by  the  power  of  its  decree,  establish 
among  the  people  a  habit  of  such  postponement ;  but 
what  it  cannot  do  is  to  make  the  principle  of  con- 
tract and  its  sanctity  anything  else  or  other  than  it 
is.  It  is  only  in  foreign  sovereignties,  therefore,  where 
divine  right  is  assumed,  that  this  pretence  is  to  be 
looked  for.  It  was  set  forth  and  probably  believed 
in  with  great  confidence  by  Louis  XV.  Avhen  he 
gave  John  Law  the  right  hand  of  his  power,  made 
him  Controller-General  of  the  finances  of  France,  and 
issued  illimitable  paper  money.  Perhaps  the  highest 
expression  of  assumed  potentiality  over  natural  law 
ever  given,  at  least  since  the  days  of  theocracy,  was 
that  given  by  Calonne  to  Marie  Antoinette,  in  an- 
swer to  her  request  for  money  from  the  government : 
"  Madame,  if  it  is  possible,  it  is  done  ;  if  it  is  impos- 
sible, it  shall  be  done."     But  in  a  free  government, 


340  INDUSTRIAL   LIBERTY 

for  tlie  liigliest  ethical  reasons,  no  power  is  great 
enough  to  make  a  broken  pledge  a  virtue,  and  for 
the  highest  political  reasons,  that  which  points  to- 
wards the  impossible  is  never  attempted. 

The  principle  involved  couples  the  duty  of  the 
citizen  who  freely  makes  a  promise,  and  of  the 
State  which  makes  a  promise,  to  its  performance, 
and  requires  that  no  State  in  its  relations  A^dth  its 
citizens  may  give  to  its  promises  the  quality  of  per- 
formance ;  nor  compel  its  citizens  in  their  relations 
to  each  other  so  to  regard  them.  The  denial,  there- 
fore, by  the  Constitution  to  the  States  of  the  I'ight 
to  impair  the  obligation  of  contract  was  based  upon 
a  principle  and  not  upon  a  policy ;  and  it  cannot 
possibly  imply  the  right  of  the  Federal  Government 
to  violate  that  principle.  The  Supreme  Court,  then, 
sought  authority  for  the  sovereignty  which  it  was 
defining  not  in  our  Constitution,  but  in  the  assumed 
authority  of  other  governments  whose  sovereignties 
pretend  to  rest  upon  divine  right. 

Upon  the  second  assumption,  namely,  that  a  power 
not  expressly  withheld  from  Congress  by  the  Consti- 
tution may  be  exercised  by  the  Federal  Government, 
and  that  a  fiat  power  not  withheld  can  be  so  exercised, 
it  may  be  noted  that  what  the  Constitution  did  pro- 
vide expressly  was  "  that  no  State  shall  pass  any  law 
impairing  the  obligation  of  contract."  The  better 
reasoning  would  seem  to  be  that  when  the  Constitu- 
tion directed  that  between  a  State  and  its  citizens, 
or  between  citizen  and  citizen,  a  contract  shall  be  no 


PATERNAL    GOVERNMENT  34 1 

less  tliau  a  contract,  it  meant  by  necessary  implica- 
tion that  tlie  Federal  Government  could  not  in  its 
relation  to  the  citizen  or  in  the  relation  between 
citizen  and  citizen  declare  that  a  contract  shall  be 
something  less  than  a  contract.  The  denial  by  the 
Constitution  of  the  State's  authority  to  impair  the 
obligation  of  contract  is  not  simply  because  it  was 
inexpedient  to  allow  a  State  to  impair  such  obliga- 
tion, but  because  the  sanctity  of  contract  is  a  vital 
principle  of  liberty.  The  reasoning  in  the  case  under 
discussion  seems  very  much  like  reasoning  that  be- 
cause the  Constitution  forbids  a  State  to  pass  a  law 
impairing  the  obligation  of  contract,  and  does  not 
specifically  forbid  the  Federal  Government  to  pass 
such  a  law,  that  therefore  it  is  within  the  power  of 
the  Federal  Government,  in  the  exercise  of  unforbid- 
den sovereignty,  to  impair  the  obligation  of  con- 
tract. 

There  is  one  hopeful  prophecy  in  the  report  of 
the  case.  It  comes  from  Mr.  Justice  Field.  In  de- 
livering the  dissenting  opinion  he  says  :  "  The  ques- 
tion has  come  again,  and  it  will  continue  to  come 
until  it  is  settled  so  as  to  uphold  and  not  mar  the 
contracts  of  parties ;  to  promote  and  not  defeat 
Justice." 

In  looking  at  the  consequences  of  this  decision,  we 
must  not  be  misled  by  the  fact  that  it  has  had  but 
small  disastrous  effect  upon  the  present  credit  of  the 
nation.  Although  the  decision  stands,  we  are  not  yet 
seriously  suffering  from  its  consequences.  Our  credit 


342  INDUSTRIAL  LIBERTY 

is  yet  unimpaired,  but  this  is  because  of  our  matei'ial 
prospei'ity  and  not  by  reason  of  our  higli  sense  of 
obligation.  The  consequences  may  be  postponed  for 
a  long  time;  but  when  examined,  it  ^vill  be  found 
that  the  postponement  rests  more  upon  our  ability  to 
pay  than  u^^on  our  appreciation  of  the  obligation  of 
our  contracts.  Nevertheless,  whilst  the  direct  conse- 
quences are  thus  postponed,  the  collateral  influence 
of  the  decision  is  by  no  means  invisible  to  those  who 
will  examine  the  conditions  surroundinsr  us.  It  would 
be  interesting  to  know  how  far  the  reasoning  which 
influenced  the  Supreme  Court  in  thus  marring  the 
sanctity  of  contract  has  been  instinctively  adopted 
in  all  the  field  of  industry.  If  it  be  in  the  power  of 
the  people  in  their  collective  capacity  to  make  a 
promise  to  pay,  a  payment,  it  easily  comes  to  be 
thought  within  the  power  of  the  individual  to  con- 
form to  this  example,  and  instinct  leads  to  this 
course  more  readily  than  reason  directs.  If  a  gov- 
ernment may  make  a  fiat  indefinitely  postponing 
a  substantial  performance,  a  citizen  of  that  govern- 
ment may  easily  be  supposed  to  fall  into  accord  with 
the  reasoning  and  apply  it  to  his  promises  and  there- 
upon devise  the  artifices  w^hich  he  may  set  up  in 
the  place  of  performance.  When  the  door  to  the 
supplanting  of  a  performance  by  the  promise  of  one, 
is  thus  opened  by  an  authority  to  which  the  whole 
nation  looks  for  its  direction  in  right,  the  whole  field 
of  malcontents  may  enter.  The  active  participants 
in  the  struggle  for  existence  are  often   turbulent, 


PATERNAL    GOVERNMENT  343 

sometimes  moved  by  a  sense  of  fancied  or  real  power, 
by  selfishness,  ignorance,  or  cupidity,  sometimes 
driven  to  resent  the  untoward  oppression  of  coi'porate 
power.  AYe  may  expect  these  participants  thus 
excited  to  ignore  the  sanction  of  right.  But  severe 
as  are  the  results  thus  created  by  the  turbulence  of 
the  immediate  contestants,  they  can  only  be  tem- 
porary so  long  as  our. law-givers  and  our  law-inter- 
preters remain  firm  in  the  right.  When  the  passions 
of  the  turbulent  subside  we  may  have  hope  of  the 
readjustment  of  things  to  normal  conditions.  But 
when  the  example  of  wrong  comes  from  the  citadel 
of  the  Constitution  itself ;  when  it  is  announced  upon 
a  solemn  adjudication ;  or  when  it  is  imbedded  in 
the  permanent  law  of  the  land  and  confirmed  by  this 
authority,  there  is  grave  cause  for  apprehension  in 
regard  to  the  continuance  of  liberty. 

I  do  not  mean  to  say  that  we  have  not  had  devia- 
tions from  the  rio;ht  of  freedom  of  contract  in  lesrisla- 
tive  enactment  before.  The  existence  of  the  special 
lien  laws  and  of  class  legislation  of  all  kinds  proves 
the  contrary.  But  I  think  it  is  safe  to  say  that  we  have 
never  before  had  so  du*ect  an  announcement  by  au- 
thority in  support  of  this  deviation  from  the  essence 
of  contract ;  and  whilst  legislation  of  this  untoward 
character  has  flourished  before  this  decision,  it 
may  now  take  encouragement  from  the  reasoning 
of  the  Supreme  Court  in  confirmation  of  the  loosened 
sense  of  obligation,  and  thus  continue  and  enlarge 
the  mischief;  and  from  some  appearances  it  is  so 


344  INDUSTRIAL   LIBERTY 

takius:  tliis  eucourafrement.  Part  at  least  of  the 
indirect  influence  of  this  decision  may  be  seen  in  tlae 
increased  activity  of  tlie  State  legislatures  in  tam- 
pering in  one  way  and  another  with  the  freedom 
of  contract ;  in  the  enactment  of  class  legislation, 
arising  from  the  assumption  of  beneficence,  and  sup- 
porting the  inferior,  at  the  expense  of  the  normal, 
in  the  contract  relation. 

We  have  now  to  look  at  the  second  illustration  of 
paternalism  as  shown  in  the  effort,  through  legisla- 
tive enactment,  to  limit  the  freedom  of  contract,  and 
to  treat  that  which  falls  strictly  within  the  definition 
of  contract  as  not  entitled  to  its  sanctity.  This  in- 
stance we  will  find  in  what  are  called  usury  laws. 

Usury  laws  have  marked  the  contest  between  in- 
dustry and  feudalism,  and  as  part  of  this  contest 
nothing  has  been  more  persistent  than  the  ecclesias- 
tical resistance  to  the  I'ight  of  parties  to  agree  in 
reference  to  the  use  of  money  upon  rates  of  interest. 
Whilst  one  by  one  the  sumptuary  laws  which  regu- 
lated the  prices  of  commodities  were  overcome  and 
repealed  in  the  progress  of  industry  until  freedom 
in  the  barter  of  everything  came  to  be  regarded 
as  necessary,  yet  the  economical  principle  of  this 
freedom  concerning  the  great  medium  through  which 
all  barter  is  accomplished  was  steadily  denied.  Mon- 
tesquieu's "  Spirit  of  Laws  "  was  put  upon  the  Index 
Exptir  gator  ills  almost  entirely  for  advocating  the 
taking  of  interest ;  and  in  the  whole  history  of  in- 
dustrialism, wherever  the   law  of  usury  was  most 


PATERNAL    GOVERNMENT  345 

rigorously  asserted,  there  industry  languished ;  and 
wherever,  through  caprice,  interest,  or  neglect,  tho 
natural  economic  law  was  allowed  to  prevail,  in 
proportion  to  that  prevalence,  freedom  with  refer- 
ence to  the  rates  of  interest  marked  the  degree  of 
freedom  of  commerce  and  industry.  It  was  so  with 
the  Ilanseatic  League ;  it  was  so  during  the  time  of  the 
free  city  of  Venice ;  and  when  thereafter  this  free- 
dom was  overcome  by  the  Church  and  the  nobility, 
money-lending  came  to  be  confined  to  the  proscribed 
Jews,  its  practice  became  odious  and  industry  sub- 
sided. Up  to  the  time  Bentham  wrote,  the  opinion 
was  little  less  than  universal  that  severe  usury  laws 
were  essentials  of  civilization,  and  the  statute-books  of 
all  nations  were  cumbered  with  them.  The  restric- 
tion upon  these  laws  which  has  taken  place  since  that 
time  is  mainly  traceable,  I  think,  to  the  influence  of 
his  writinirs.  In  the  introduction  to  a  series  of 
letters  written  in  1787,  he  says : 

"  I  do  not  recollect  ever  seeing  anything  yet  in  behalf 
of  the  liberty  of  making  one's  own  terms  in  money  bar- 
gains. From  so  general  and  universal  a  neglect,  it  is  an  old 
opinion  of  mine  that  this  meek  and  unassuming  species 
of  liberty  has  been  suffering  much  injustice. 

"A  proposition  I  have  been  accustomed  to  lay  down 
to  myself  on  this  subject  is  the  following  one,  viz.:  that 
no  man  of  ripe  years  and  sound  mind,  acting  freely,  with 
his  eyes  open,  ought  to  be  hindered,  with  a  view  to  his 
own  advantage,  from  making  such  a  bargain,  in  the  way 
of  obtaining  money,  as  he  thinks  fit ;  nor  (what  is  a  neces- 


346  INDUSTRIAL   LIBERTY 

sary  consequence)  anybody  hindered  from  supplying  him 
upon  any  terms  he  may  see  fit  to  accede  to. 

"  This  proposition,  were  it  received,  would  level,  you 
see,  at  one  stroke,  all  the  barriers  which  laws,  either  statute 
or  common,  have  in  their  united  wisdom  set  up  against 
the  crying  sin  of  usury." 

There  is  no  new  argument  to  be  set  forth  in  sup- 
port of  the  repeal  of  these  laws.  The  most  compre- 
hensive reason,  perhaps,  is  that  usury  laws  are  con- 
trary to  the  freedom  of  contract ;  that,  like  all  paternal 
acts,  they  do  not  accomplish  the  object  aimed  at ;  and 
when  they  do  accomplish  the  more  direct  purpose,  the 
accomplishment  is  always  at  the  sacrifice  of  some 
larger  interest.  The  effort  to  protect  the  spendthrift 
interferes  with  the  freedom  of  the  thrifty,  and  the 
effort  to  guard  the  poor  by  limiting  the  freedom  of 
contract  in  the  rates  of  interest,  operates  as  a  res- 
traint upon  the  freedom  of  the  poor  and  the  rich 
alike.^ 

The  usury  laAVS  were  abolished  altogether  in  Eng- 
land in  1854;  Denmark  in  1855;  Spain  in  1856; 
Sardinia,  Holland,  Norway,  and  the  Swiss  Canton  of 
Geneva  in  1857;  Oldenburg  in  1858;  Bremen  in 
1859;  Saxony  and  Sweden  in  1864;  Belgium  in 
1865  ;  Prussia,  the  North  German  Confederacy,  and 
Austria  (in  part)  in  1867;  and  in  fourteen  of  the 

'  Adam  Smith  based  his  acceptance  of  the  usury  laws  upon  two  points  ; 
that  they  tended  "  to  protect  spendthrifts  "  and  "  to  repress  projectors  "  ; 
but  in  the  latter  part  of  his  life,  through  the  influence  of  Bentham's  rea- 
soning, he  entirely  admitted  his  mistake  upon  these  points. 


PATERNAL    GOVERNMENT  347 

States  and  Territories  of  tLe  Federal  Union  tliey  no 
longer  exist.  ^ 

Under  no  governments  in  the  world  does  in- 
terest rule  so  low  as  in  England  and  Holland, 
where  the  only  rate  established  by  law  is  where 
there  is  no  agreement,  as  in  legal  rates  on  the  I'esult 
of  a  lawsuit ;  and  in  no  State  in  the  United  States 
does  the  rate  of  interest  rule  so  low  as  in  the  State 
of  Massachusetts,  where  the  usury  laws  were  abol- 
ished in  1867^  Of  course,  it  is  not  pretended 
that  the  abolition  of  the  usury  laws  in  itself  re- 
duces the  rate  of  interest,  for  its  normal  rate  rests 
upon  economic  laws,  and  legislation  limiting  such 
rate  is  only  an  interference.     Where  freedom   and 

'  In  none  of  these  is  it  pretended  that  the  people  or  the  business  inter- 
ests labor  under  any  disadvantage  therefrom,  as  compared  with  the  condi- 
tion of  things  in  other  States  and  Territories  where  a  different  policy  is  main- 
tained. In  eight  States  the  only  penalty  imposed  for  taking  interest  in 
excess  of  the  legal  rate  is  the  forfeiture  of  the  interest,  and  in  eight  more 
the  lender  forfeits  only  the  excess  of  the  contract  over  the  legal  rate.  New 
York,  Oregon,  and  Virginia  are  the  only  States  which  still  maintain  extreme 
usury  laws,  needing  only  the  old-time  provision  debarring  the  offender  from 
the  right  of  Christian  burial,  to  make  them  equal  in  all  respects  to  the  laws 
of  the  Middle  Ages.  In  New  York,  where  the  statute  in  its  most  essential 
provisions  is  rarely  enforced,  the  recipient  of  usury  forfeits  both  principal 
and  interest,  and  is  made  liable,  in  addition,  to  fine  and  imprisonment. 
Virginia  forfeits  contract  and  exacts  a  penalty  of  twice  the  principal. 
Oregon  forfeits  principal,  interest,  and  costs.  Idaho  Territory  prescribes  a 
fine  of  $300,  or  imprisonment  for  six  months,  or  both.  (See  "  Usury 
Laws,"  Economic  Tracts,  No.  4,  New  York,  18S1.) 

"^  The  following  is  an  extract  from  the  act  to  repeal  the  laws  against 
usury,  as  passed  in  the  legislature  of  Massachusetts.  (See  General  Stat- 
utes of  Massachusetts,  1867,  c.  56.) 

Section  i.  When  there  is  no  agreement  for  a  different  rate  of  interest 
of  money,  the  same  shall  continue  to  be  at  the  rate  of  six  dollars  upon  one 


348  INDUSTRIAL   LIBERTY 

sanctity  of  contract  prevail  the  rate  of  interest  will 
always  be  regulated  by  tlie  sense  of  security  or 
insecurity,  and  by  the  abundance  or  scarcity  of 
money.  The  sense  of  security  will  result  either  from 
a  faith  in  the  honesty  of  the  borrower,  or  in  his 
ability  to  pay,  or  from  both  these  causes  combined ; 
sometimes  one  of  the  causes  is  preponderant  and 
sometimes  the  other;  sometimes  they  are  equally 
strong.  Manifestly  here  is  a  difference  which  legis- 
lation cannot  regulate,  and  the  fixing  of  an  arbitrary 
rate  in  contracts  conduces  to  nothino;  else  than  a  re- 
sort  to  evasion  and  artifice  to  overcome  such  artifi- 
cial restriction.  Legislation  can  never  create  an 
abundance  of  any  commodity ;  nor  can  it  produce 
ccmfidence  from  conditions  which  do  not  themselves 
warrant  confidence.  It  makes  no  difference  what 
the  form  or  the  ];)otency  of  the  government  may 
be,  the  effort  to  accomplish  these  artificial  conditions 
tends  to  the  deterioration  of  credit.  Such  efforts 
made  in  Rome  in  the  highest  stage  of  its  power ;  in 
France  when  it  was  most  paternal ;  such  efforts  as 
are  no^v  being  made  in  Egypt,  Turkey,  Austria,  and 
Kussia  are  standing  illustrations  of  this. 

In  the  State  of  New  York  the  rate  of  interest  has 


hundred  dollars  for  one  year,  and  at  the  same  rate  for  a  greater  or  less 
sum,  or  for  a  longer  or  shorter  time. 

Section  2.  It  shall  be  lawful  to  contract  to  pay  or  reserve  discount  at 
any  rate,  and  to  contract  for  payment  and  receipt  of  any  rate  of  interest, 
provided,  however,  that  no  greater  rate  of  interest  than  six  per  centum  per 
annum  shall  be  recovered  in  any  action,  except  when  the  agreement  to  pay- 
such  greater  rate  of  interest  is  in  writing. 


PATERNAL    GOVERNMENT  349 

been  fixed  by  statute  at  six  per  cent,  and  Draconian 
penalties  have  been  attached  to  the  violation  of  this 
artificial  law.  And  yet,  anyone  who  knows  anything 
of  the  manner  of  doing  business  in  the  city  of  New 
York,  knows  that  this  rigorous  law  does  not  in  the 
least  operate  as  anything  but  an  obstacle  to  the 
natural  current  of  business,  an  obstacle  which  is 
overcome  by  systematic  evasion.  Rates  of  inter- 
est rise  far  above  the  six  per  cent,  when  scarcity 
prevails,  and  run  very  much  below  it  when  the 
market  is  eas}^  The  existence  of  the  law  only 
has  the  effect  of  making  commerce  indirect  in  its 
methods  instead  of  direct.  A  man  may  not  loan 
directly  for  more  than  six  per  cent.,  but  the  borrower 
places  his  paper  in  the  hands  of  a  broker  to  be  sold 
for  what  it  will  brins;.  Thus  there  comes  to  be 
thrown  about  every  transaction  the  necessity  of  in- 
termediaries for  the  purpose  of  evading  the  law  and 
its  penalties,  or,  more  accurately  speaking,  for  evading 
a  penalty  inflicted  for  acting  in  conformity  with  those 
economic  laws  which  the  artificial  legislation  under- 
takes to  interrupt.'  . 

I  have  said  that  the  rate  of  interest  depends  on  the 

'  "  In  New  York  City,  during  the  year  1880,  the  demand  for  the  use  of 
money  for  a  time  was  such  that  loans  were  made  at  from  1-32  to  1-8  and 
(in  a  few  rare  instances)  even  1-4  per  cent,  per  day  in  addition  to  legal  in- 
terest. In  1879,  rates,  during  a  period  of  stringency,  reached  3-8  per  day 
above  the  prescribed  rate,  which  was  equivalent  to  144  per  cent,  a  year. 
Just  before  the  panic  in  1873,  rates  reached  i  1-2  per  day,  or  547  per  cent, 
a  year.  From  twenty  to  seventy-eight  times  the  rates  prescribed  by  law 
were  thus  paid.  The  law  of  New  York  expressly  ordaining  that  the  hire 
of  money  should  be  at  the  rate  of  seven  dollars  for  a  hundred  dollars  for 


350  INDUSTRIAL   LIBERTY 

sense  of  security  or  of  insecurity,  and  the  abundance 
or  scarcity  of  money ;  and  that  this  sense  of  security 
or  insecurity  will  prevail  either  from  a  faith  in  the 
borrower's  honesty  and  his  ability  to  pay,  or  from  a 
faith  in  his  ability  and  his  policy  to  keep  up  his 
credit.  Unhappily  it  must  be  conceded,  I  think, 
that  the  extent  of  credit  which  we,  as  a  people  hav^e, 
in  our  relations  as  borrowers,  arises  more  largely  from 
the  latter  condition ;  that  is,  I'ather  from  our  ability 
to  pay  and  the  policy  of  keeping  up  our  credit,  than 
from  the  nicer  considerations  of  honesty.  When  the 
end  of  the  war  found  us  with  a  depleted  treasury 
and  a  great  debt,  we  exhibited  a  phenomenal  activity 
in  industrial  development,  and  began  paying  off  our 
debt  with  unprecedented  rapidity,  at  the  same  time 
gaining  rapidly  in  all  directions,  and  advancing  with 
great  strides.  This  exterior  success  struck  the  Eng- 
lish mind  with  amazement,  and  produced  unbounded 
confidence  in  our  commercial  power.  England  there- 
upon became  as  eager  to  loan  as  before  she  was 
anxious  to  withhold.  The  apprehension  of  our  near 
failure  which  existed  during  the  war  and  for  a  while 
thereafter  changed  with  these  indications  of  physical 


one  year,  and  in  the  same  proportion  for  a  longer  or  shorter  time,  and  pre- 
scribing heavy  penalties  for  the  same,  was  therefore  a  dead  letter,  wholly 
unsustained  by  public  opinion,  and  without  any  effect  in  attempting  to  reg- 
ulate the  price  of  the  most  important  of  all  commodities.  In  June,  1879, 
the  Legislature  of  New  York,  after  consideration  of  the  subject,  refused  to 
repeal  her  usury  laws,  but  lowered  the  prescribed  rate  from  seven  to  six 
per  cent.  The  alteration  of  the  rate  has,  however,  produced  no  change  in 
either  public  action  or  public  opinion."  (See  "  Usury  Laws,  Economic 
Tracts,  No.  4,"  p.  61.) 


PATERNAL    GOVERiVMENT  35 1 

success  and  entirely  disappeared,  and  in  its  place 
came  unbounded  confidence.  But  one  attitude  was 
as  capricious,  if  not  as  illogical,  as  the  other.  Any 
one  examining  the  grounds  of  this  confidence  cannot 
conclude  that  it  rests  largely  upon  our  sense  of  the 
obligation  or  sanctity  of  contract.  We  have,  on  the 
contrary,  risen  in  spite  of  State  repudiations,  multi- 
plying instances  of  defalcation  of  trust  and  of  the 
dishonest  management  of  railways.  Of  course  there 
were  incidents  of  material  growth  in  the  change 
which  of  themselves  inspired  confidence,  such  as  the 
large  product  of  the  precious  metals,  the  develop- 
ment of  the  mining  industry  and  transportation,  the 
liberation  of  volumes  of  coin  by  reason  of  the  return 
to  specie  payments,  and  the  increase  in  the  represen- 
tative currency  through  the  establishment  of  national 
banks,  based  upon  the  national  credit ;  yet,  in  spite  of 
these  and  similar  facts,  one  must  conclude,  in  surveying 
the  whole  field,  that  the  species  of  confidence  which 
is  born  of  commercial  integrity,  a  sense  of  obligation 
of  contract,  of  individual  and  national  honesty,  has 
little  reason  to  exist ;  for  these  badges  of  integrity, 
unfortunately,  are  not  conspicuous  signs  of  the  times. 
Thirty  yeai'S  ago  such  a  decision  as  that  which  the 
Supreme  Court  of  the  United  States  has  rendered 
in  the  legal-tender  case  would  have  filled  the  minds 
of  all  creditors  with  distrust.  As  borrowers  then, 
we  would  have  been  taught  the  necessity  of  honesty 
as  a  prerequisite  for  credit.  Thirty  years  ago  the  re- 
pudiations of  the  States  of  Virginia,  North  Carolina, 


352  INDUSTRIAL  LIBERTY 

Soutli  CaroliDa,  Georgia,  Louisiana,  Tennessee,  and 
Minnesota,  tlie  defalcations  of  the  townships  and 
cities  in  the  AVest,  would  have  caused  the  financier 
of  London  to  withhold  his  money.  The  conclusion 
under  such  circumstances  must  be  that  foreigners 
are  ready  to  lend  us,  not  because  we  are  believed 
to  be  honest,  but  because  we  are  known  to  be  suc- 
cessful. 

Having  thus  given  two  illustrations  of  paternalism 
in  its  untoward  relation  to  the  freedom  and  sanctity 
of  contract,  it  remains  to  be  noted  that  there  are 
many  other  instances  of  such  legislation  yet  un- 
mentioned.  Among  these  I  ^vill  only  name  the 
creation  of  liens  for  priorities  to  certain  classes  of 
workmen,  the  creation  of  liens  for  particular  kinds 
of  work,  and  priorities  of  light  to  certain  classes  of 
creditors.  It  is  not  within  the  scope  of  my  ^vork  to 
discuss  these  in  detail,  and  I  will  not  notice  them 
any  further  than  by  saying  that  they  are  necessarily 
paternal  by  reason  of  their  tendency  to  confer  class 
privileges.  There  is  no  delusion  more  j)i'6valent 
than  that  which  presumes  the  existence  of  equal 
political  right  in  such  legislation.  If  we  ^vill  follow 
these  legislative  attempts  to  their  legitimate  conclu- 
sions, we  shall  find  that  they  invariably  rank  as 
political  inferiors  the  men  or  class  thus  intended  to 
be  protected,  and  that  the  acceptance  by  tliis  class  of 
the  protection  involves  a  recognition  on  its  part  of 
political  inferiority.  The  inevitable  tendency  of 
this  legislation  is  to  lower  the  tone  of  the  industrial 


PATERNAL    GOVERNMENT  353 

man,  to  impair  bis  thrift,  energy,  and  manhood,  to 
lessen  his  capacity  to  take  care  of  himself  and  to 
protect  his  o\vn  end  of  the  bargain.  We  shall  find 
also  that  in  other  respects  such  legislation  inevitably 
defeats  its  own  end,  because  the  normal  citizen, 
whether  he  be  capitalist  or  laborer,  instinctively  pre- 
fers to  make  his  contracts  with  those  who  exhibit 
manhood  in  making  and  performing  their  bargains. 
It  is  the  natural  tendency  of  all  industry  in  whole- 
some conditions  to  avoid  contact  with  those  who 
either  make  themselves  inferior,  or  permit  the  law  to 
make  them  so.  The  man  who  puts  himself  in  the 
position  of  asking  or  accepting  assistance  from  the 
State  in  the  conduct  of  his  business  necessarily  pro- 
claims himself  to  some  extent  an  incapable ;  and  it 
is  not  by  such  that  the  welfare  of  the  community  is 
best  promoted,  or  that  the  individual  incentive  is 
best  preserved.  Political  and  industrial  vigor  flour- 
ish by  self-dependence  ;  and  this  is  best  preserved 
by  the  removal  of  restraints,  not  by  the  rendering  of 
assistance. 

There  is  another  phase  of  paternalism  which  I  have 
noted  in  its  order  at  the  beginning  of  the  last  chap- 
ter, namely,  the  carrying  on  by  the  government  of  any 
business  enterprise,  such,  for  example,  as  the  man- 
agement and  control  of  railways.  A  government 
which  engages  in  any  industry  for  profit,  unless  it 
excludes  the  individual  from  all  effort  in  that  par- 
ticular industry,  necessarily  comes  in  contact  \Adth 
the  citizen  as  a  competitor.     The  competition  under 


354  INDUSTRIAL  LIBERTY 

sucli  circumstances  cannot  possibly  be  on  equal 
terms,  nor  can  tlie  industry  so  managed  by  tlie  gov- 
ernment be  wholesomely  managed,  since  it  con- 
stantly invites  and  receives  political  manipulation ; 
and  as  tlie  government  has  a  motive  for  profit  and  a 
power  to  employ  this  motive  in  discriminating 
against  those  who  are  in  competition  with  it,  it  can- 
not deal  justly  with,  or  preserve  the  equal  rights  of, 
the  citizen.  Therefore,  there  is  a  tendency  in  such 
ownership  towards  a  deterioration  of  business  integ- 
rity ;  a  tendency,  too,  toward  the  creation  of  class 
interests,  and  of  those  obstructions  to  equal  indi- 
vidual right  which  class  interests  produce. 

I  have  thus  undertaken,  as  briefly  as  possible,  to 
discuss  paternalism  in  its  bearing,  tendencies,  and 
effects,  and  to  illustrate  the  definition  which  marks 
its  character.  I  will  now  very  briefly  and  without 
discussion  touch  upon  some  of  those  acts  of  gov- 
ernment which  I  have  designated  at  the  beginning 
of  the  last  chapter  as  non-paternal  in  their  charac- 
ter. The  coinage  of  money  by  the  general  govern- 
ment, the  regulation  of  weights  and  measures,  the 
collection  of  taxes  equitably  assessed,  are  acts  which 
are  non-paternal  because  they  are  essential  for  the 
administration  of  the  whole  government,  and  con- 
tain in  themselves  no  elements  which  tend  toward 
the  creation  of  class  distinction. 

Similarly,  the  erection  of  fortifications  for  the  de- 
fence of  the  nation,  the  creation  and  maintenance  of 
the  army  and  navy,  are  national  necessities  which 


PATERNAL    GOVERNMENT  355 

conduce  to  the  benefit  of  all  tlie  people  alike.  They 
are  the  means  whereby  the  freedom  and  security  of 
the  nation  are  maintained.  The  support  of  the  sol- 
diers and  sailors  disabled  in  service  is  an  incident  to 
those  necessities  ;  this  creates  no  class  ;  it  is  given 
simply  as  an  act  of  justice  to  those  who  have  ren- 
dered service  for  the  protection  of  the  government 
and  become  disabled  in  that  service  ;  and  it  is  only 
when  the  government  undertakes  to  stretch  the 
bounds  of  its  care  beyond  the  limits  of  justice,  that 
this  support  becomes  an  evil. 

Other  necessary  and  non-paternal  functions  of  the 
government  are  to  provide  for  the  protection  of  the 
public  lands,  and  to  establish  the  prerequisites  for 
naturalization  in  accordance  with  the  Constitution ; 
for  where  the  public  lands  are  held  not  for  profit, 
but  to  be  disposed  of  for  the  well-being  of  the  citi- 
zen, M-ithout  distinction,  in  accordance  with  the 
growth  of  the  country,  there  can  be  no  paternalism 
in  tlie  management  of  them.  By  the  establishment 
of  the  prerequisites  for  naturalization,  and  in  the 
regulation  by  the  government  of  its  relations  with 
other  governments,  the  prime  essentials  for  its  sol- 
idarity are  secured  ;  and  the  purpose  of  this  solidarity 
is  the  maintenance  of  the  equal  right  of  the  citizens, 
without  distinction. 

There  are  then  left  to  be  considered  those  non- 
paternal  acts  wliich  belong  to  the  police  duties  of 
government.  Among  these  are  the  follo\^n[ng:  the 
regulation  of  the  manufacture  and  sale  of  intoxicants 


35^  INDUSTRIAL   LIBERTY 

and  poisons ;  tlie  prevention  of  the  adulteration  of 
food ;  tlie  preservation  of  the  peace,  the  government 
of  the  Indian  tribes,  and  the  prevention  of  interfer- 
ence by  the  criminal  and  defective  classes  with  the 
industrial  and  political  rights  of  citizens. 

The  control  of  the  manufacture  and  sale  of  in- 
toxicants and  poisons,  the  regulations  concerning 
adulterated  food,  the  preservation  of  the  peace,  and 
the  control  of  the  Indian  tribes,  fall  so  obviously 
w^ithiu  the  province  of  the  police  department  of  gov- 
ernment as  subject  to  police  administration,  that 
they  cannot  be  misunderstood,  and  need  not,  there- 
fore, be  particularly  discussed.  The  necessity  for  the 
strict  ^^reservation  of  the  equal  industrial  right,  by 
the  prevention  of  interference  on  the  part  of  the 
criminal  and  defective  classes,  is  not,  however,  so 
clearly  or  so  generally  realized,  since  it  is  one  of  the 
characteristics  of  paternal  government  in  practice  to 
make  the  line  of  distinction  between  the  police  do- 
main and  the  civil  and  industrial  domain  in  many 
instances  more  or  less  indistinct.  This  indeiinite- 
ness  arises  often  from  beneficence  of  motive  in  the 
government, — a  beneficence  "which  I  think  it  may  be 
shown  necessarily  involves  injustice.  Although  I 
have  indicated  the  failure  of  such  beneficence  to  pro- 
duce the  desired  result,  I  will  notice  the  effect  of 
this  motive  more  particularly  here,  in  order  that  I 
may  more  clearly  define  the  police  functions  of  the 
government  with  respect  to  the  criminal  and  defect- 
ive classes. 


PATERNAL    GOVERNMENT  357 

Without  accepting  the  nice  shades  of  distinction 
which  modern  philosophers  employ  touching  the 
underlying  human  motives,  I  think  we  may  consider 
charity  as  one  of  the  most  lovely  of  the  private  and 
individual  virtues.  Nevertheless,  we  shall  find  upon 
examination  that  it  cannot  be  a  political  virtue  ;  that, 
indeed,  in  a  government  it  is  a  dangerous  vice,  and  all 
the  more  dangerous  because  it  is  so  apt  to  be  mis- 
taken for  a  virtue.  A  man  or  an  association  of  men 
as  private  citizens  may  exercise  the  grace  of  giving 
and  helping,  if  they  have  the  individual  means  with 
which  to  give  and  help ;  but  a  free  government 
can  never  dispense  gifts  or  render  direct  charitable 
aid,  either  to  individuals  or  to  classes,  from  motives 
of  generosity,  for  the  reason  that  such  a  government 
has  nothing  of  its  own  with  which  to  be  generous. 
It  itself  lives  solely  by  contribution  ;  it  gets  this  con- 
tribution from  the  citizens  for  the  specific  purpose  of 
preserving  the  equal  political  right.  It  is  therefore 
a  trustee  of  all  that  it  holds  for  the  purpose  of  this 
preservation,  because  it  has  received  its  whole  power 
and  all  of  its  resources  upon  such  a  trust.  Its  sole 
virtue,  therefore,  is  justice ;  and  when  it  attempts 
generosity  with  the  trust  fund  or  the  trust  power,  it 
necessarily  does  it  at  the  expense  of  Justice.  A  free 
government,  therefore,  cannot  distribute  favors ;  it 
can  only  measure  out  exact  justice. 

By  the  inherent  law  which  governs  custody  of 
property,  whether  the  trustee  be  a  State,  a  corpora- 
tion, or  an  individual,  it  must  be  that  any  effort  to 


353  INDUSTRIAL   LIBERTY 

divert  that  property  for  any  purpose  wliatever ;  any 
use  of  it,  except  in  accordance  with  the  strict  limita- 
tion of  the  trust,  is  not  and  cannot  be  virtuous ;  it 
must  be  vicious,  because  it  is  the  misappropriation 
of  trust  funds  or  trust  power.  This  is  a  rule  to 
which  no  safe  exception  can  be  made.  There  are 
doubtless  many  who  mean  to  be  uncompromising  in 
their  demands  for  reform,  as,  for  example,  those  op- 
posed to  the  existing  methods  of  railway  manage- 
ment, who  are  nevertheless  led  by  a  sense  of  benefi- 
cence to  make  exceptions  iu  favor  of  certain  kinds  of 
management  which  would  strike  at  the  very  central 
principle  upon  which  real  reform  must  rest.  As  an 
instance  of  tliis,  the  Nevj  Yorh  Times,  in  its  issue  of 
Feb.  27th,  1888,  editorially  says  : 

"  It  is  undoubtedly  diffcult  to  devise  any  anmendment  to 
the  inter-State  commerce  law  by  which  the  railroads  shall 
be  able  to  give  reduced  rates  or  free  transportation  to 
religious  or  charitable  bodies  without  opening  the  door 
to  fraud.  But  we  should  say  that  it  might  be  safe  to 
leave  this  to  the  discretion  of  the  companies  under  such 
regulations  as  it  is  practicable  to  devise.  The  Children's 
Aid  Society  of  this  city,  for  instance,  formerly  obtained 
help  from  the  railway  companies  in  furnishing  homes  in 
the  West  to  children  rescued  from  poverty  or  Avorse.  To 
this  action  on  the  part  of  the  companies  there  could  be 
no  possible  objection,  nor  do  we  sec  how  the  right  to 
renew  it  would  give  rise  to  any  serious  abuse.  If  any 
company  chose,  under  cover  of  granting  such  facilities,  to 
give  free  passes  to  those  who  have  no  claim  to  them,  it 
would,   if  refused   this   right,    find    some   other  mode   of 


PATERNAL    GOVERNMENT  359 

evasion,  as,  indeed,  it  is  reported  many  companies  do.  If 
a  company  wishes  to  violate  the  law,  it  will  do  so  without 
this  amendment,  while  a  real  service  to  a  very  good 
work  is  now  impossible." 

What  is  tlie  tendency  of  this  reasoning  ?  The  coun- 
try is  at  present  engaged  in  an  effort  to  check  the 
abuses  of  railway  management.  It  is  for  this  that 
the  Inter-State  Commerce  Law  has  been  enacted.  If 
it  be  admitted  that  those  who  exercise  offices  of 
trust  must  be  held  to  a  strict  performance  of  theii' 
duties  as  trustees,  it  must  be  realized  that  these 
duties  can  never  be  fully  performed  if  the  trustee  is 
permitted  to  make  any  exception  whatever  whereby 
he  may  use  his  trust  funds,  or  his  trust  authority, 
in  order  to  gratify  his  sympathies  or  the  sympathies 
of  others ;  in  other  words,  he  cannot  be  generous  or 
kind  with  what  he  does  not  own.  If  this  were 
thoroughly  appreciated  in  all  its  consequences,  the 
minister  would  realize  that  he  could  do  no  better  ser- 
vice to  Christianity  and  to  justice  than  by  insisting 
upon  paying  his  full  railway  fare,  and  the  legislator 
and  the  judical  officer  would  realize  they  could  not 
better  express  their  desire  to  guard  the  real  trust 
relation  than  by  declining  to  receive  free  passage ; 
and  the  philanthropist,  although  moved  by  his  sym- 
pathy to  relieve  suffering  and  correct  crime,  would 
understand  that  any  sum  contributed  for  such  pur- 
pose must  be  a  voluntary  contribution  from  an 
owner,  and  not  a  contribution  by  a  custodian,  from 
the  pro])erty  of  others. 


360  INDUSTRIAL   LIBERTY 

It  is  not  altogether  uureasonable  to  suppose  that 
some  of  these  very  poor  children,  for  whom  assist- 
ance is  thus  asked,  owe  their  condition  in  part  at 
least  to  the  loose  sense  of  trust  which  is  so  prevalent, 
and  that  therefore  their  condition  is  one  which  the 
acceptance  of  the  half-fare  and  free  passage  have 
helped  to  create.  When  there  shall  be  a  better  reali- 
zation, then  of  the  unalterable  j)i'inciple  that  a  man 
entrusted  mth  the  control  of  a  railway,  or  an  office, 
or  property,,  or  powers,  or  rights  of  any  kind  which 
do  not  belong  to  him,  is  a  custodian,  and  only  has  the 
rights  of  such,  it  will  be  seen  that  no  beneficent  in- 
tention, direct  or  indirect,  can  sanction  his  diversion 
of  that  property,  or  in  any  way  make  a  virtue  out  of 
such  generosity. 

Besides  this,  the  beneficence  of  the  aim  does  not 
always  accomplish  its  end,  even  when  the  right  to 
give  exists.  Virtuous  as  the  intentions  may  be,  results 
of  virtuous  intentions  are  not  always  wholesome.  In 
spite  of  all  that  can  be  done,  help  often  enervates 
the  recipient  instead  of  strengthening  him.  Efforts 
to  relieve  poverty  by  indiscriminate  giving  only 
tend  to  increase  it.  When  we  propose  to  establish 
homes  for  the  poor,  even  setting  aside  the  question 
of  who  is  to  provide  them,  setting  aside  the  fact  that 
they  do  not  come  from  any  effort  on  the  part  of  the 
poor,  that  they  are  the  product  of  the  industry  of 
others,  there  remains  the  other  question,  when  they 
are  thus  furnished,  what  is  the  effect  ?  Obviously, 
the  poor  are   not   stimulated    to  industry;  their  in- 


PATERNAL    GOVERNMENT  36 1 

centive  is  not  increased,  but,  on  tlie  contrary,  it 
is  lessened;  and  beliind  the  apparently  beneficent 
project  there  is  often  not  only  the  misdistribution 
of  the  results  of  energy,  but  a  general  increase  of 
the  number  of  the  poor,  and  a  greater  or  less  de- 
terioration of  their  character. 

A¥hen  by  continued  beneficence  we  increase  the 
poor-rates  to  make  the  poor  more  comfortable,  ex- 
perience has  shown,  especially  in  England,  that  the 
result  is  an  immediate  increase  in  the  number  of  the 
poor,  and  a  corresponding  discouragement  of  the 
efforts  of  the  thrifty.  When  we  erect  lying-in  hos- 
pitals with  "  tours "  for  the  quiet  reception  of  ille- 
gitimate births,  nature's  response  to  this  assumed  be- 
neficence is  an  increase  in  the  number  of  illegitimates. 

The  sentiment  of  friendship  is  closely  allied  to 
that  of  beneficence.  This  is  also  an  individual 
grace ;  its  true  office  is  exerted  in  the  private  and 
social  relations.  There  it  often  mitigates  the  strug- 
gles and  levels  the  asperities  of  life.  But  it  is  not  a 
political  virtue  any  more  than  is  charity.  When  a 
custodian  of  right  or  power  in  a  free  government 
undertakes  to  gratify  his  private  sense  of  friendship 
in  dispensing  right  or  power,  he  commits  injustice 
and  violates  his  trust.  When  friendship  is  made  the 
reason  for  an  appointment  to  a  political  office,  the 
true  test  of  ability  to  perform  the  duties  of  that 
office  is  disregarded.  The  office  is  not  a  gift ;  it  is 
a  trust — the  duties  of  which,  in  the  interest  of  the 
whole  people  should  be  performed  as  a  trust. 


362  INDUSTRIAL  LIBERTY 

WbeD  we  have  eliminated  benevolent  and  pa- 
ternal aims  from  the  administration  of  government, 
there  will  still  remain  to  be  dealt  with,  a  large 
number  of  human  beings  who,  by  reason  of  their 
deficiency  in  physical,  mental,  or  moral  qualities, 
constitute  the  delin(j[uent  and  defective  classes  of 
the  body-politic.  The  care  of  these  falls  upon 
the  government  as  a  necessity.  With  the  faculties 
and  persons  of  these  the  government  can  deal  only 
directly  ;  not  through  any  benevolence,  but  from  the 
necessity  which  brings  them,  as  persons,  within  the 
control  of  the  State.  When  the  functions  of  gov- 
ernment are  rigorously,  faithfully,  and  promptly 
performed,  there  will  be  all  the  more  complete 
freedom  of  action  among  the  normal  industries  of 
civilization,  and  a  smaller  number  of  delinquents 
and  defectives  to  be  taken  care  of.  The  vicious  are 
to  be  treated  as  criminals,  or,  where  they  are  imbe- 
cile or  incapable,  as  the  responsibilities  of  society, 
and  so  treated  in  order  that  they  may  be  kept  from 
interference  w^ith  its  activities.  This  police  protec- 
tion does  not  in  the  least  degree  recpiire  that  they 
shall  be  foisted  upon  the  industrial  field.  They 
become  the  care  of  the  government  only  because 
they  cannot  take  care  of  themselves,  or  because  they 
require  restraint. 

There  should  be  no  diflaculty  in  drawing  with  pre- 
cision the  line  between  the  incapables  and  the  de- 
fectives on  the  one  hand,  and  the  industrious  on  the 
other,  and   in  adhering  to  this  line.      It  marks  the 


PATERNAL    GOVERNMENT  363 

ditt'erence  betweeu  paterualisin  and  non-paternalism ; 
and  yet  it  is  just  in  this  department  of  government 
tliat  the  largest  vagueness  exists — a  vagueness  which, 
as  we  have  seen,  is  due  to  false  sentiment,  and  which 
affords  a  pretext  for  the  claims  of  the  socialist,  the  pro- 
tectionist, and  the  paternalist  generally.  There  ought 
to  be  no  difficulty,  because  the  motive  of  justice  is 
the  test ;  the  desire  for  the  preservation  of  the 
freedom  of  the  contract  relation  in  the  industrial 
field  ;  for  the  prevention  of  all  interference  with  that 
freedom,  by  which  industry  is  burdened;  the  de- 
sire for  pursuing  that  exact  course  by  which  the 
incapables  and  malcontents  will  be  reduced  to  a 
minimum  in  number,  while  the  normal  and  in- 
dustrial class  A\dll  be  increased  to  its  maximum. 
Surely,  if  the  fullest  possible  social,  industrial,  and 
political  health  of  the  i-ace  be  desirable,  the  con- 
ditions upon  which  this  is  acquired  are  worthy  of 
exact  study.  Such  well-being  comes  from  the  pres- 
ervation of  those  conditions  which  promote  political 
health  and  decrease  political  disease,  rather  than 
from  those  which,  by  tampering,  increase  pauperism, 
and,  by  infecting  the  healthy  region  by  association 
with  the  diseased,  increase  crime. 

All  the  defective  classes  of  society  are,  by  reason 
of  their  defects,  outside  the  pale  of  industry ;  and  it 
is  the  prime  function  of  government  to  keep  them 
outside ;  to  keep  separate  the  diseased  from  the 
healthy,  in  order  that  the  largest  degree  of  health 
may  be  preserved.    This  is  the  only  course  which  can 


364  INDUSTRIAL  LIBERTY 

lessen  the  number  to  be  taken  care  of,  and  at  the 
same  time,  afford  the  fullest  opportunity  for  the  ex- 
ercise of  the  strength  of  those  who  do  not  need  care ; 
and  herein  the  workings  of  justice  are  more  beneficent 
than  the  efforts  of  beneficence  itself. 

Therefore,  there  can  be  no  other  purpose  to  a 
free  government  in  treating  with  the  defective 
classes  than  to  treat  them  with  a  view  of  keeping 
them  from  interference  with  the  healthy  classes,  and 
thus  preserving  the  best  equalities  of  the  race  against 
the  delinquent,  the  recalcitrant,  or  whoever  under- 
take in  any  way  to  violate  the  terms  of  the  political 
compact,  or  are  incapable  of  compliance  with  those 
terms.  Whilst  the  penitentiary,  the  insane  asylum, 
and  the  almshouse  are  necessities  of  civilization, 
they  afford  no  reason  for  protecting  the  idle  or 
maintaining  the  thriftless,  or  for  creating  an  individ- 
ual class,  or  for  bolstering  up  the  contracting  power 
of  those  who  are  incapable  of  Ineeting  its  demands, 
or  for  interfering  in  any  way  with  the  freedom  or 
sanctity  of  contract.  A  free  government  in  taking 
care  of  the  incapables  and  the  malcontents  does  so 
from  the  duty  which  it  owes  to  civilization  ;  it  does 
so  from  its  sense  of  justice,  and  in  adhering  to  this 
sense  it  cannot  faithfully  administer  this  duty  by 
adopting  any  course  which  tends  to  increase  the  num- 
ber of  these  defectives  and  malcontents,  or  to  place 
them  in  the  way  of  the  normal  and  industrious. 
They  are  not  in  the  race  of  industry,  and  cannot 
properly  be  placed   there.      To   put  them   in  that 


PA'JERNAL    GOVERNMENT  365 

race,  and  to  maintain  them  by  props  tliroiigli  sym- 
pathy, is  only  preventing  equality  in  the  conditions 
of  the  race.  The  government's  benevolence,  there- 
foi'e,  is  the  sin  of  political  injustice.  The  penalty 
which  is  \asited  upon  this,  is  political  and  moral 
deterioration. 


CHAPTER  XII 

ENGLAND     AND     A3[ERICA  ;      THE     RELATION     OF     EACH 
TO    INDUSTRIAL    LIBERTY. 

In  the  i-eign  of  Queen  Anne,  the  policy  of  non-pa- 
ternalism, which  had  been  growing  for  a  long  time, 
became  predominant.  This  policy  originated  partly, 
no  doubt,  in  the  reaction  from  the  intense  feeling 
generated  by  the  religious  discussion  which  had  pre- 
vailed in  the  preceding  reign,  and  partly  because  the 
industrial  classes  had  been  steadily  increasing  in 
importance  with  the  accumulation  of  industrial 
wealth.  Within  fifty  years  after  the  creation  of 
the  AYhig  party,  which  originated  in  1680,  so  great 
was  the  reaction  from  the  violence  which  had  char- 
acterized the  contest  between  the  Popish  and  Prot- 
estant parties  that,  as  Green  says,  "  before  fifty  years 
of  their  rule  had  passed.  Englishmen  had  forgotten 
that  it  was  possible  to  persecute  for  differences  of  re- 
ligion, or  to  put  down  the  liberty  of  the  press,  or  to 
tamper  with  justice,  or  to  rule  without  a  parlia- 
ment." ^   The  motives  which  characterized  the  Whig 

'  "  A  Short  History  of  the  English  People,"  p.  696. 
366 


ENGLAND   AND   AMERICA  367 

party  in  its  secular  administration  Lave  been  set  forth 
as  the  preservation  of  the  power  and  majesty  of  the 
people ;  the  authority  and  independency  of  parlia- 
ment in  its  relation  to  the  king,  liberty,  resistance, 
deposition.'  The  motives  which  characterized  this 
party  in  its  religious  administration  were  expressed 
in  the  maxim  that  the  government  "  should  accord 
toleration  to  all  Protestant  sects,  and  in  this  maxim 
it  found  new  strength  in  the  manifest  material  bene- 
fits which  it  produced."  '^  The  whole  power  of  the 
party  was  exerted  in  decreasing  the  coercive  power 
of  the  ruler  over  the  subject  and  in  furthering  tolera- 
tion. Its  principles  were  exemplified  in  such  legis- 
lation as  the  Habeas  Corpus  Act,  and  later  in  the  Bill 
of  Kights,  framed  to  secure  the  subject  against  mon- 
archical aggressions.3 

This  disposition  against  paternalism  continued  to 
be  manifested,  and  in  the  main  prevailed,  until  it  was 
interrupted  by  the  French  Revolution,  and  afterwards 
by  the  Napoleonic  wars,  Avhich  tended  to  unsettle 
all  European  policies,  and,  as  I  have  heretofore 
shown,  imparted  to  the  English  statesmen  a  fear  of 
the  people.  The  nou-paterL.d  movement,  however, 
somewhat  recovered  from  its  lapse,  and  in  the  early 
part  of  the  present  century  was  exerting  its  influence 
manifestly  for  the  cultivation  of  individuality  in  the 
citizen.     The  legislation  which  proceeded  from  this 

'  Bolingbroke's  "  Dissertations  on  Parties."  p.  5. 

"^  Lecky  "  England  in  the  Eighteenth  Century,"  vol.  I.,  p.  209. 

^  Spencer  "  The  Man  versus  the  State,"  p.  3. 


368  INDUSTKIAl.    LIBERTY 

spirit  was  cliai'Mcteiized  In-  an  encouragement  of  self- 
depeudence  and  a  discouragement  of  governmental 
assistance,  until  the  policy  of  non-paternalism  j)ro- 
duced  at  last  tlie  repeal  of  the  Corn  Laws.  From 
that  time  to  the  present,  there  has  been  a  gradually 
groAving  tendency  in  the  opposite  direction,  exhibited 
in  the  ever-increasing  efforts  on  the  part  of  the  gov- 
ernment to  reach  out  its  paternal  hand  in  interfer- 
ence with  the  citizen.  In  America,  after  our  Revo- 
lution, inspired  partly  by  the  more  liberal  policy 
which  had  prevailed  in  England,  but  more  by  the 
sense  of  independence  born  of  our  Constitution  and 
promoted  by  surrounding  conditions,  the  legislation 
\vas  chiefly  of  a  character  which  promoted  individual 
self-dependence.  The  influence  of  the  French  Revo- 
lution, which  stayed  the  progress  of  this  phase  of 
freedom  in  England  had,  as  I  have  already  indi- 
cated, but  slight  effect  in  that  direction  in  America. 
It  rather  afforded  an  op])ortunity  for  following  the 
middle  path  between  the  extreme  conservatism  that 
set 'in  in  England,  and  the  violence  which  was  born 
of  the  French  Revolution. 

After  the  return  of  the  English  to  their  former  pol- 
icy of  non-interference,  the  conditions  both  in  Eng- 
land and  in  America  continued  favorable  to  the 
growth  of  self-dependence  and  self-restraint,  until 
steam  and  the  mechanical  inventions  became  potent 
factors  in  the  progress  of  industry.  These  produced 
a  sudden  change,  which  threw  the  industrial  orders 
of  society  altogether  out  of  their  customary  channels. 


ENGLAND   AND   AMERICA  369 

and  made  necessary  a  new  adjustment  of  the 
methods  of  industry  to  the  fundamental  principles  of 
industrial  liberty. 

In  England  the  existence  of  hereditary  classes  and 
the  influence  of  the  prevailing  land  tenures  have  in- 
troduced into  the  ]3roblem  of  this  new  adjustment 
several  factors  that  are  not  to  be  met  with  in  the 
problem  as  it  exists  in  America.'     If  it  be  desirable, 

'  In  order  that  we  may  more  easily  realize  the  influences  and 
consequences  of  tenure  in  the  two  countries,  I  will  very  briefly  note 
the  most  prominent  acts  of  English  land  legislation  and  of  English 
judicial  decisions  upon  land  tenure.  While  the  practice  of  tying  up 
estates  by  means  of  entails  was  not  unknown  to  the  Anglo-Saxon, 
such  methods  were  not  in  accord  with  the  spirit  of  his  inherited 
institutions  ;  and  alienation  of  land  became  so  general  by  the  time 
of  Edward  I.  that  in  the  thirteenth  year  of  his  reign  the  barons  procured  the 
passage  of  the  statute  "  Dedoiiis,"  the  effect  of  which  was  to  establish  strict 
entails  and  permit  the  conversion  of  existing  tenures  into  a  perpetual  succes- 
sion of  life  estates.  The  object  of  the  barons  in  obtaining  this  legislation 
was  to  strengthen  their  hands  in  the  struggle  with  the  king.  This  condi- 
tion of  afi'airs  lasted  about  two  hundred  years,  until,  in  1472,  it  was  decided 
in  Taltarum's  case  ("Year-Book,"  12  Ed.  IV.,  p.  19)  that  the  entail  might 
be  docked  by  a  collusive  action  known  as  a  "  common  recovery,"  instituted 
by  the  proposed  purchaser  against  the  tenant-in-tail.  The  freedom  of 
alienation  consequent  upon  this  decision  continued  until  the  time  of  the 
civil  wars,  when,  by  the  ingenuity  of  the  lawyers,  were  originated  those  de- 
vices for  perpetuating  succession  inland  >  .at  have  reached  their  full  growth 
in  the  modern  "  settlement."  By  the  ;.  t  of  3  &  4  Wm.  IV.,  c.  74,  com- 
mon recoveries  were  abolished  and  entails  were  permitted  to  be  barred 
by  a  deed  for  that  purpose  enrolled  in  chancery  :  inasmuch,  however, 
as  this  statute  interposes  a  "  protector  of  the  settlement  "  whose  con- 
sent is  necessary  before  the  entail  can  be  barred,  it  renders  the  alienation 
of  a  settled  estate  more  difficult  even  than  was  the  case  before  its  passage. 
There  have  been  recent  attempts  made  by  Parliament  to  mitigate  the  recog- 
nized evils  resulting  from  the  system  of  settlement  ;  notably  in  1856,  when 
the  tenant-for-life  was  empowered  to  grant  leases  for  twenty-one  years  ;  and 
later  in  1882,  when  his  powers  over  the  estate  were  enlarged  by  what  is 
known  as  the  Settled  Estates  .\ct    (Reign  of  Queen  Victoria,  London,  1887, 


3/0  INDUSTRIAL    LIBERTY 

» 

in  the  existing  conditiou  of  civilization,  that  famil}' 
honors  and  titles  should  be  preserved  and  family 
estates  perpetuated,  then  some  device  is  essential  to 
such  perpetuation.  But  if,  on  the  other  hand,  these 
come  to  be  regarded  by  mankind  as  the  means  for 
maintaining  posthumous  pride  of  present  owners 
rather  than  for  the  welfare  of  future  generations, 
they  must  be  viewed  as  barriers  to  industrial  progress, 
and  their  continuance  cannot  be  any  longer  desirable.' 

vol.  I.,  p.  65).  These  measures,  however,  were  palliative  merely  and  not 
remedial.  Finally  in  March,  1S87,  the  Land  Transfer  Bill  was  introduced 
into  the  House  of  Tords.  This  act  proposed  to  abolish  primogeniture  and 
entails,  and  to  provide  for  the  granting,  by  the  tenant  in  esse,  of  an  inde- 
feasible title.     It  however  never  became  a  law. 

Of  course  entails  and  settlements  have  in  their  origin  no  necessary  con- 
nection with  primogeniture  or  with  each  other  ;  but  in  their  modern  devel- 
opment the  interconnection  has  become  inseverable,  and  together  they 
constitute  an  artificial  system,  whether  founded  upon  law  or  custom,  whereb)' 
over  two  thirds  of  the  land  in  England  is  practically  kept  out  of  the  mar- 
ket, and  political  class  distinctions  are  maintained  in  derogation  of  equal 
individual  right. 

'  One  has  but  to  note  the  earlier  hardships  of  land  tenure  inherent  in  the 
system  in  order  to  appreciate  its  utter  antagonism  to  industrial  progress. 

While  we  are  not  accustomed  to  look  in  Blackstone  for  instances  of  pa- 
thetic feeling,  I  think  there  are  few  anywhere  which  are  more  pathetic  than 
the  following  : 

"  The  heir,  on  the  death  of  his  ancestor,  if  of  full  age,  was  plundered  of 
the  first  emoluments  arising  from  his  inheritance,  by  way  of  relief  and 
primer  seisin  ;  and  if  under  age,  of  the  whole  of  his  estate  during  infancy. 
And  then,  as  Sir  Thomas  Smith  very  feelingly  complains,  'when  he  came 
to  his  own,  after  he  was  out  of  wardship,  his  woods  decayed,  houses  fallen 
down,  stock  wasted  and  gone,  lands  let  forth  and  ploughed  to  be  barren,' 
to  reduce  him  still  further,  he  was  yet  to  pay  a  half  year's  profits  as  a  fine  for 
suing  out  his  livery  ;  and  also  the  price  or  value  of  his  marriage,  if  he 
refused  .such  wife  as  his  lord  and  guardian  had  bartered  for,  and  imposed 
upon  him  ;  or  twice  that  value  if  he  married  another  woman.  Add  to  this  the 
untimely  and  expensive  honor  of  knighthood,  to  make  his  poverty  more  com- 
])letely  splendid.     And  when,  by  these  deductions,  his  fortune  was  so  shat- 


ENGLAND  AND   AMERICA  371 

It  is  impossible  to  estimate  with  auy  accuracy  tlie 
extent  to  wliicli  the  laws  and  customs  of  primogeni- 
ture, entails,  and  settlements  which  exist  in  England 
have  retai-ded  the  gi'owth  of  industrial  liberty  and  the 
development  of  individual  self-dependence.  In  the 
domain  of  social  science  ultimate  I'esults  are  produced 
by  causes  more  or  less  indirect,  remote,  and  obscure. 
It  can  be  shown,  however,  that  generally  the  period 
of  greatest  intellectual  awakening  and  material  prog- 
ress in  English  history  coincides  closely  with  the  in- 
terval between  the  general  breaking  down  of  entails 
and  the  subsequent  revival  of  their  objectionable 
features  in  the  more  modern  "  settlement  " — an  inter- 
val during  ^vhich  alienation  of  land  was  less  restricted 
than  it  has  been  at  any  period  since.  A  recent 
authority  upon  the  subject  says  : 

"  By  the  end  of  the  Tudor  period  the  practice  of  break- 
ing entails  by  means  of  common  recoveries  had  already 
become  well  established,  and  must  have  brought  many 
estates  into  the  market.  .  .  .  It  is  impossible  not  to 
connect  the  rapid  growth  and  singular  independence  of 
the  English  gentry  under  the  Tudors  and  Stuarts  with  the 
limitation  of  entails  and  the  freedom  of  alienation  which 
characterized  this  remarkable  period.'" 

As  we  have  seen,  it  is  not  only  lately  that  this  system 
of  tenure  has  been  called  into   question  ;  from  its 

tered  and  ruined  that  perhaps  he  was  obliged  to  sell  his  patrimony,  he  had 
not  even  that  poor  privilege  allowed  him,  without  paying  an  exorbitant  tine 
for  a  license  of  alienation.'*  (See  "  Blackstone's  Commentaries,"  Bk.  II., 
p.  76.) 

'  Hon.  G.  Broderick  :  "  Systems  of  Land  Tenure,"  Cobden  Club  Es- 
says, p.  gg. 


3/2  INDUSTRIAL   LIBERTY 

earliest  existence  it  has  from  time  to  time  been  chal- 
lenged, and  it  is  this  challenging  which  has  produced 
whatever  modification  of  its  rigors  exists.  Bacon,  in 
describing  the  new  expedients  which  were  resorted 
to  for  defeating  that  legislation  of  his  day  which 
was  enacted  against  entails,  strikes  at  the  very  root 
of  the  question  in  one  sentence.  "  Therefore,"  he 
says,  "  it  is  worthy  of  good  consideration,  whether  it 
is  better  for  the  subject  and  sovereign  to  have  land 
secured  to  men's  names  and  blood  by  perpetuities 
with  all  the  inconveniences  above  named,  or  to  be 
free  with  the  hazard  of  undoing  his  house  by  un- 
thrifty posterity."  '  More  recently  it  was  asked  by 
Berkeley,  "  What  right  hath  the  eldest  son  to  the 
worst  education  ? "  And  more  recently  still,  New- 
man, in  an  essay  on  English  laws,  speaks  of  that 
tendency  to  establish  "  a  magnificently  fed  and 
colored  drone,  the  incorporation  of  wealth  and  social 
dignity,  the  visible  end  of  all  human  endeavor,  a  sort 
of  great  Final  Cause,  immanent  in  every  family." 

Before  the  discovery  of  steam  and  the  invention 
of  machinery  incident  to  it,  or,  perhaps  more  correct- 
ly speaking,  before  this  element  of  civilization  grew 
to  great  proportions,  the  general  tendencj^  of  the 
people  of  England  was,  as  we  have  seen,  rather 
steadily  progressive  against  paternalism  and  in  favor 
of  the  true  laisse?:  faire,  non-paternalism,  and  indi- 
vidual self-dependence ;  and  it  ^^'as  only  when  the 
progress  of   industry  became  overwhelming  as  the 

'  Bacon's  Works,  Poslon,  vol.  XTV.,  p.  414. 


ENGLAND   AND   AMERICA  373 

result  of  the  supremacy  of  steam,  that  the  instances 
of  paternalism  in  legislation  began  to  multiply. 
There  Avere  before  that  time  many  examples  of 
paternal  legislation,  as  it  is  natural  to  expect  there 
would  be  in  a  government  containing  so  many  es- 
sentially paternal  features  in  its  fundamental  struc- 
ture ;  these  were,  however,  far  fewer  than  they  have 
since  grown  to  be,  and  after  the  discovery  of  steam 
the  new  paternal  devices  have,  one  after  another, 
multiplying  as  time  progressed,  been  invoked  to 
make  compromise  betAveen  the  ne^N'  industrial  and 
the  old  feudal  orders.  It  may  be  said  that  the 
hereditary  class  has  an  instinctive  disposition  to  pre- 
serve its  status  against  the  growing  encroachments 
of  industry,  and  that  this  instinct  has  become  one  of 
self-preservation,  since  these  industries  have  grown 
into  great  political  importance.  The  most  natural 
course,  therefore,  for  the  statical  class  under  these 
circumstances  is  to  make  its  necessary  concessions  to 
the  inevitable  progress  of  industry  rather  out  of  its 
bounty  than  in  recognition  of  the  political  right  of 
the  industrial  class.  Such  a  course  rests  upon  the 
hope  that  the  rigorous  tenures  may  be  presei'ved  and 
the  class  distinctions  perpetuated  through  patronage 
on  the  part  of  the  hereditary  favorites  of  the  govern- 
ment toward  the  dependants  ;  and  such  patronage 
also  falls  into  accord  with  the  sense  of  political 
superiority  of  the  hereditary  class.  As  a  result, 
then,  the  hereditary  class,  with  this  disposition 
toward  the  industrial  class,  readily  fell  in  wdth  that 


374  INDUSTRIAL  LIBERTY 

spirit  of  benevolence  Avliich,  ^\'itll  the  public,  came 
to  impart  a  tone  of  paternal  character  to  all  legisla- 
tion. 

The  philanthropic  element,  however,  is  not  of 
itself  sufficient  to  account  for  the  extent  of  paternal- 
ism which  has  characterized  English  legislation.  A 
natural  coalition  therefore,  arose  between  it  and  the 
landed  interest.  As  far  as  the  philanthro2)ist  is  con- 
cerned, his  motive  in  this  sympathetic  legislation 
was  identical  with  that  which  had  inspired  the  old 
religious  domination.  Each  tended  to  produce  the 
same  result ;  for  the  disposition  to  govern  a  man's 
faith  promotes  the  desire  to  govern  and  direct 
his  physical  welfare.  To  the  statical  class,  on  the 
other  hand,  the  encouragement  of  such  legislation 
appeared  to  afford  an  opportunity  for  quieting  the 
demands  of  industrial  progress,  and  at  the  same 
time  keeping  intact  their  own  hereditary  privi- 
leges. Thus  under  the  influence  of  the  sympathetic 
spirit,  combined  with  that  of  the  statical  interest, 
paternalism  grew  just  as  it  had  grown  under  dog- 
matism. I  do  not  mean  to  say  that  .this  coalition 
was  the  result  of  a  scheme  deliberately  planned  b}' 
the  landed  interest,  but  it  accounts  for  the  adhe- 
sion of  that  interest  to  the  benevolent  paternalism  in 
part  at  least.  Such  illustrations  as  the  poor-laws, 
w^here  the  exactors  from  industry  and  the  recipients 
of  the  exactions — the  poor — made  common  cause  in 
extracting  from  the  industrious,  are  to  be  attributed 
in  some  measui'e  to  tlie  hnlf-conscious  repugnance  of 


ENGLAND  AND   AMERICA  375 

the  statical  establishmerrt  to  the  progressive  growth 
of  industrial  power.  Besides  this,  it  cannot  be 
denied  that  the  landed  interest  has  steadily  exhib- 
ited hostility  towards  the  growth  of  the  power  of 
the  industrial  class  in  politics.  This  hostility  has 
existed  from  the  time  of  the  beginning  of  the  Tory 
party ;  and  it  is  expressed  in  that  maxim  which  has 
been  made  a  fundamental  one  of  that  party  from 
its  origin,  the  maxim  to  which  I  have  heretofore 
alluded,  that  "  law  in  a  free  country  is,  or  ought  to 
be,  the  determination  of  the  majority  of  those  who 
have  property  in  land,"  and  that  "  the  right  strength 
of  this  kingdom  depends  upon  the  land,  which  is 
infinitely  superior  and  ought  much  more  to  be 
regarded  than  our  concerns  in  trade."  ^  The  effect  of 
this  philanthropic  legislation  upon  the  progress  of 
industry  may  be  clearly  noted  from  its  burdening 
this  industry,  so  far  as  it  could,  with  growing  and 
excessive  exactions,  extracting  the  means  from  it 
indirectly  for  the  performance  of  the  assumed  benefi- 
cence. Obviously  this  was  a  method  whose  ten- 
dency was  to  limit  the  progress  of  industry,  not  only 
by  w^eakening  it  through  exactions  upon  it,  but  by 
the  use  of  those  exactions  in  increasing  the  number 
of  those  for  whom  they  were  intended.  This  is 
the  genesis  of  sympathetic  legislation.  Notwithstand- 
ing all  this  burden,  industry  with  its  momentum 
continued  to  grow  towards   an  irrepressible  issue. 

'  "  England  in  the  Eighteenth  Century,"  by  W.  E.  H.  Lecky,  NewYork 
1878,  vol.  I.,  p.  217. 


37^  INDUSTRIAL   LIBERTY 

When  tlie  citizen  comes  to  realize  that  the  surplus 
that  gets  into  the  government  vaults  is  extracted  from 
his  labor ;  Avhen  he  realizes  that  it  represents  at 
last  so  much  of  the  toil  of  the  workingman, 
and  that  all  that  is  expended  by  the  govern- 
ment, no  matter  how  beneficent  the  intention,  with 
any  other  purpose  than  to  secure  exact  Justice 
and  equality  of  right  to  the  individual  citizen, 
necessarily  tends  to  lessen  the  industrial  capacity 
and  increase  the  incapacity  and  number  of  those 
who  receive  but  do  not  earn ;  in  other  words,  to 
learn  that  the  revenues  of  the  country  come  from 
the  labor  of  the  country,  whether  intermediately 
through  the  landed  ^^I'oprietor  or  not,  and  that 
the  expenditures  of  the  government  which  are 
made  for  any  purpose  other  than  that  of  keeping 
equal  the  citizen's  right  necessarily  make  his  right 
less,  his  burden  heavier,  and  increase  the  number  of 
undeserving  recipients ; — when  he  realizes  all  this 
and  begins  to  ap23reciate  his  own  relative  j)olitical 
strength,  he  is  likely  to  grow  restive  under  the 
restraints  by  which  artificial  legislation  protects  rig- 
orous tenure.  And  usually  his  instinct  in  some 
measure  makes  him  conscious  of  the  existence  of 
wrongs  before  his  intelligence  enables  him  to  per- 
ceive the  causes,  and  by  slow  degrees  his  reverence 
for  existing  orders  wears  away,  and  in  its  place  there 
comes  the  dis]30sition  to  assert  his  I'ight. 

Among   the    very   earliest   results   of    industrial 
growth  in  England,  long  before  the  invention  of 


ENGLAND   AND   AMERICA  377 

steam,  was  the  absorption  of  tlie  smaller  liolcliDgs  of 
land  by  the  more  successful  in  the  industrial  field, 
and  the  disappearance  of  the  smaller  holder.  Such 
a  result  in  itself  rather  emphasized  the  dependent 
condition  of  the  laboring  class  generally,  but  in  the 
further  progress  of  industrialism  there  grew,  as  in- 
cident to  the  new  conditions,  a  place  of  larger  im- 
portance for  the  laborer.  Some  of  the  drippings  of 
the  increased  products  of  industry  came  to  fall  to  the 
people  generally,  and  this  effected  the  gradual  im- 
provement of  the  physical  condition  of  the  laborer, 
through  the  cheapening  of  the  product  to  him 
as  a  consumer,  as  well  as  through  the  better  wages 
which  he  received.  In  this  progress,  especially 
in  the  last  half-century,  as  Mr.  Giffen  has  shown/ 
the  laborer's  condition  has  become  considerably  im- 
proved. Whilst  some  of  the  economic  writers 
set  this  down  as  a  reason  why  the  working  classes 
should  be  contented,  it  seems  to  me,  as  I  have 
before  intimated,  that  instead  of  producing  satis- 
faction, its  tendency  is  and  has  been  to  stimulate 
discontent ;  for  it  is  through  this  condition  that  the 
laborer  is  taught  the  disparity  of  his  position,  and  it 
is  through  such  teachings  and  such  realization  that 
there  growls  a  dissatisfaction  in  his  mind,  which  finds 
more  and  more  expression,  just  as  he  realizes  his 
political  power.  While  in  England  the  disparity 
between  the  landed  proprietor  and  the  wage- 
earner  has  not  lately  increased,  there  are  many  in- 

*  "  Essays  on  Finance,"  by  Robert  Giffen,  New  York,  iS86,  p.  365. 


37S  INDUSTRIAL   IIBERTY 

(lications  tliat  the  existence  of  this  disparity  has  be- 
come more  perceptible  to  the  wage-earner,  and  is 
therefore  unmistakably  more  of  a  source  of  discon- 
tent to  him  ;  and  as  the  industry  to  which  he  is  allied 
grows  stronger,  it  promotes  in  him  more  of  the  spirit 
of  independence  and  aggression. 

Meanwhile  the  vested  and  hereditary  interest  ex- 
hibits but  slight  disposition  to  relax  the  rigor  of  its 
tenure.  The  old  order,  guarded  by,  and  dependent 
for  its  existence  upon  the  old  forms,  and  stimulated 
by  the  value  of  social  worth  which  is  associated 
with  land,  continues  to  preserve  its  holdings  from 
generation  to  generation,  to  keep  the  system  ciystal- 
lized  and  to  present  the  same  unyielding  front  to 
the  varied  and  increased  activities  of  the  new  force 
of  industry.  While  it,  however,  is  thus  stationary 
in  its  position,  industry  is  growing,  and  growing  ag- 
gressive ;  and  thus  the  disparity  increases. 

The  Enoflish  have  none  of  those  checks  to  consti- 
tutional  change  which  exist  in  America.  By  the 
result  of  one  general  election  both  ministry  and  con- 
stitution may  be  changed ;  and  when  Ave  consider 
the  extent  to  Which  the  franchise  has  become  en- 
larged, we  may  easily  realize  that  such  a  change  is 
now  more  possible  than  it  has  hitherto  been,  because 
the  influence  of  the  growth  of  industry  is  becoming 
more  impressive  and  potent  each  day.  Indeed, 
when  we  consider  the  conservatism  of  English 
thought,  the  delibei'ateness  in  the  past  of  its  progress 
towards  radical  change,  the  prominence  of  this  influ- 


ENGLAND  AND  AMERICA  379 

ence  of  industry  wliicli  has  developed  within  the  last 
ten  or  twelve  years  is  no  less  than  amazing.  The 
law  of  personal  property  is  inevitably  supplanting 
the  la^v  of  real  property.  It  is  exercising  that  which 
Maine  calls  a  "  dissolving  and  a  transforming  in- 
fluence." 

If  we  will  eliminate  from  the  question  all  second- 
ary and  minor  matters,  we  will  find  standing  out 
prominently  in  the  political  and  social  conditions 
of  England  to-day  two  salient  and  opposing  ten- 
dencies. On  the  one  hand,  there  is  this  force  of 
industry,  progressive,  dynamic,  and  aggressive ;  on 
the  other,  the  land  tenure  with  its  restrictions  upon 
alienation,  more  or  less  statical,  rigid,  and  immov- 
able. The  contest  suggested — considering  the  fibre, 
power,  and  growth  of  the  dynamic  force,  and  the 
waning  political  strength  of  the  statical  element — 
is  a  contest  which  points  towards  the  ultimate  su- 
premacy of  the  industrial  power.  No  degree  of  resist- 
ance on  the  part  of  the  landed  power,  such  as  that 
which  was  exhibited  in  France  at  the  time  of  the 
calling  together  of  the  States-General  Just  previous 
to  the  Revolution,  can  be  expected.  The  temper  of 
the  English  nation  cannot  be  compared  to  that  of  the 
French ;  for,  although  the  Englishman  is  slower,  he 
has  a  far  keener  perception  of  equal  right  and  jus- 
tice. Whilst  the  progress  of  industry  will  not  stay  or 
grow  any  the  less  aggressive  ;  Avhilst  it  will  continue 
to  move  in  a  definite  line  upon  the  rigid  tenures  of 
the  landed  and  hereditary  interests,  the  solution  of 


38o  INDUSTRIAL   LIBERTY 

the  problem  ^vill  in  all  probability  come  by  less  hos- 
tile methods  ;  and  before  the  ultimate  victory  of  in- 
dustry becomes  inevitable,  changes  w^ill  be  accom- 
plished by  concession.  At  present  the  attempt  upon 
the  part  of  the  landed  class,  as  we  have  seen,  is  to  delay 
the  issue  and  preserve  their  status  by  alliance  with  the 
revived  paternalism.  It  is  at  best  but  a  temporizing 
expedient,  and  cannot  fail  to  defeat  itself  and  precip- 
itate the  result,  the  ultimate  of  which  will  be  the 
abolition  of  the  prevailing  system  of  land  tenure  in 
England.  The  present  distribution  of  landed  prop- 
erty, however,  depending,  as  it  does,  upon  legal  con- 
ditions which  have  for  over  two  centuries  favored  the 
aggregation  of  estates,  is  one  which  will  not  be 
altered  without  considerable  resistance  upon  the  part 
of  the  landed  interest.  They  can  be  expected  to 
relin(|uish  this  restraint  upon  industry  only  with  great 
reluctance.  When  we  consider  the  prominence,  in 
the  mind  of  the  Englishman,  of  the  social  importance 
of  land,  and  the  sanctions  which  time  has  thrown 
about  it,  and  the  fact  that  the  nobility  and  the  landed 
classes  have  owed  their  political  preeminence  to  the 
system  whose  existence  is  threatened,  it  is  not  to  be 
supposed  that  an  immediate  radical  reform  will  be 
accomplished.  Even  with  the  abolition  of  primogen- 
iture and  entails,  with  the  largest  freedom  of  aliena- 
tion, social  influences  arising  from  deep-rooted  customs 
wdll,  for  a  considerable  time,  delay  such  a  redistribu- 
tion of  the  land  as  will  be  necessary  to  conform  with 
ultimate  industrial  demands. 


ENGLAND   AND   AMERICA  38 1 

Nevertheless,  the  freedom  of  alienation  lies  in  the 
direction  of  industrial  progress,  and  it  is  one  of  the 
steps  towards  the  inevitable  supremacy  of  industrial 
power.  In  force  and  progressiveness,  the  cities  and 
the  industries  which  centre  in  them  far  outweigh  the 
landed  interest;  and  with  the  enlargement  of  the 
franchise  in  England,  we  may  expect  the  industrial 
element  to  assert  itself  in  such  leo:islation  as  will  ul- 
timately  result  in  the  accomplishment  of  its  freedom. 

It  is  more  than  possible  that  the  first  breaking 
down  of  the  prevailing  tenures  will  occur  in  the 
methods  to  be  adopted  for  the  settlement  of  the  Irish 
question.  It  becomes  daily  more  plain  that  no  pal- 
liative treatment  can  cure  the  condition  of  affairs 
which  exists  in  Ireland,  and  that  the  question  does 
not  involve  merely  the  fertility  of  the  soil.  The 
issue  there  has  come  to  be  one  of  ownership  as 
against  occupation ;  and  this  issue  cannot  be  indefi- 
nitely postponed.  The  complaint  is  not  that  the 
land  is  unproductive,  but  that  the  tenant  is  not  and 
cannot  become  an  owner.  Whilst  the  true  remedy  does 
not  lie  in  the  confiscation  of  property,  I  believe  it  will 
eventually  be  found  to  exist  only  in  the  establish- 
ment of  freedom  of  alienation  and  in  the  encourage- 
ment of  the  exercise  of  that  freedom  upon  the  part 
of  the  owner  in  esse.  This  course,  with  the  time 
necessary  for  the  adjustment  of  existing  conditions  to 
the  new  freedom,  and  this  only,  will  accomplish  the 
permanent  political  and  social  well-being  of  the  Irish. 

Turning  to  America,  we  find  that  whilst  paternal- 


382  INDUSTRIAL   LIBERTY 

ism  exists  aud  flourishes  here,  the  conditions  upon 
which  it  thrives  are  in  important  respects  essentially 
dijffierent  from  those  which  exist  in  England.  In 
one  respect  America  possesses  a  signal  advantage 
over  England,  and  this  lies  in  the  freedom  of  her 
land  system  from  entailments  and  primogeniture. 
There  is  nothing  in  our  Constitution,  or  our  Federal 
statute  law,  which  prohibits  the  creation  of  perpetual 
tenures  with  i-eference  to  land.  Whilst  this  is  a 
subject  which,  under  the  Constitution,  belongs  to  the 
regulation  of  the  several  States,  it  is  due  to  the 
genius  of  American  liberty  that  in  nearly  every  one 
of  these  States  entails  are  prohibited  and  primogeni- 
ture abolished  by  statute.  AVhilst,  however,  this 
subject  is  not  dealt  with  by  the  Federal  Constitution, 
the  policy  of  the  several  States  falls  into  accord  with 
its  spirit,  and  has  thus  prevented  the  existence  here 
of  those  evils  of  land  tenure  which  complicate  the 
political  problems  of  Europe.  All  that  the  Constitu- 
tion does  provide  against  in  this  connection  is  the 
creation  of  titles  of  nobility  with  their  consequences 
of  personal  privileges  and  authority,  and  by  this 
prohibition  one  of  the  chief  motives  for  the  pi^eser- 
vation  and  perpetuation  of  family  estates  is  removed. 
In  this  freedom  from  the  primogeniture  and  entail- 
ments of  the  Common  Law  we  have  tlie  opportunity 
of  readjusting  our  vested  interests  with  greater  facil- 
ity each  generation,  thereby  bringing  them  into 
agreement  witli  the  current  activities  and  incen- 
tives of  the  citizen.     AVe  are  thus  enabled,  with  less 


ENGLAND  AND  AMERICA  383 

disturbance  and  witli  a  better  opportunity  for  ex- 
amination, to  reform  political  wrongs  and  to  bring 
into  harmony  the  rights  of  all  classes  from  one  genera- 
tion to  another. 

To  recapitulate,  therefore,  the  advantage  which 
America  has  over  England,  in  addition  to  her  geo- 
graphical isolation,  lies  in  the  fact  of  the  prevailing 
freedom  of  alienation  of  land.  As  a  result  of  this 
freedom,  alienation  has  become  common,  and  land 
has  become  a  commodity  of  almost  as  easy  exchange 
as  personal  property,  and  therefore  as  fully  adapted 
to  the  activities  of  the  generation  in  being.  Besides 
this,  the  habits  of  the  American  mind  have  grown  to 
accord  with  the  exercise  of  this  freedom ;  and  the  dis- 
tribution which  results  from  the  exercise  of  the  free 
right  of  alienation  tends  to  meet  and  satisfy  the 
higher  individual  capacity  for  acquiring,  holding, 
and,  within  certain  limitations  of  public  policy,  be- 
queathing property.  There  is  in  America,  therefore, 
no  system  created  l^y  the  posthumous  pride  of  pre- 
ceding generations  to  confront  the  citizen  born  into 
the  Avorld  as  a  barrier  to  his  progress,  to  weaken 
his  incentives  and  obstruct  his  freedom :  there  is  here 
no  tyranny  of  the  dead. 

Nevertheless,  we  cannot  congratulate  ourselves 
that  in  possessing  these  immunities  we  have  every- 
thing:. Whilst  under  our  fundamental  law  we  have 
not  the  power  of  creating  and  transmitting  personal 
places  from  generation  to  generation,  there  remain 
with   us,  recognized   by    both    State    and    Federal 


384  INDUSTRIAL   LIBERTY 

laws,  certain  legislative  creations  whose  paternal 
characteristics  I  Lave  discussed  in  former  chapters, 
and  which  essentially  partake  of  the  nature  of  per- 
petuities. These  have  had  their  origin  either  directly 
in  the  Civil  Law  or  have  indirectly  sprung  from  the 
ideas  of  government  and  habits  of  thought  born  of 
that  law  and  still  potent  in  civilization.  As  these 
features  of  perpetuity  exist  in  this  country  they  are 
embodied  in  the  corporation,  the  pi-otective  tariff, 
and  the  common-school  system.  They  are  structures 
which  by  their  own  constitution  and  character  are 
continuous.  They  continue  from  age  to  age,  and  by 
their  influence  affect  each  succeeding  generation. 
They  contain  within  themselves  those  potentialities 
which  confront  the  coming  generation  and  affect  its 
activities  and  incentives.  It  is  by  them,  so  far  as 
their  intrinsic  (pialities  are  untowaixl,  that  the 
chances  for  the  existence  of  personal  capacity  in  the 
generations  to  come  are  marred,  and  the  existing 
generation  is  prevented  from  the  fair  exercise  of  its 
faculties.  When  we  come  to  realize  the  inevitable 
tendency  against  freedom  of  action  which  exists  in 
any  perpetuity,  that  there  is  nothing  ^^•hich  is  more 
a]it  to  gather  evil  qualities  than  an  ai'tificial  struc- 
tui'e  continuing  its  existence  from  generation  to  gen- 
eration, ^ve  will  be  jealous  in  guarding  this  freedom 
by  the  al)()lition  of  such  perpetuities  as  may  be 
abolished,  and  by  the  careful  supervision  of  any 
which  remain  as  necessary  to  the  support  of  physical 
convenience.     If  we  have  to  recognize  any  of  these 


ENGLAND  AND  AMERICA  385 

structures  as  necessary  to  the  requirements  of  civili- 
zation and  the  maintenance  of  physical  convenience, 
then  it  is  manifestly  the  duty  of  the  government  to 
remove  such  of  them  as  cannot  be  moulded  into  ac- 
cord with  the  rule  of  freedom,  and  to  set  such  guards 
around  those  remaining  as  will  definitely  secure  indi- 
vidual right.  If  the  government  does  not  do  this,  na- 
ture will  express  herself  in  constantly  recurring  I'etorts 
against  such  artificial  systems,  until  either  the  failure 
of  the  devices  shall  become  overwhelmingly  illus- 
trated, or  the  resulting  loss  of  individuality  shall 
leave  the  people  with  the  loss  of  their  civilization. 

In  contrasting,  then,  the  conditions  which  prevail 
in  England  with  those  which  prevail  in  America,  it 
is  obvious  that  whilst  paternalism,  according  to  the 
standard  which  I  have  undertaken  to  make  for  it, 
exists  in  the  two  countries,  its  causes  are  far  more 
deep-seated  in  England  than  in  America ;  and  the 
chief  reason  of  its  tenacity  there  lies  in  the  fact  of 
the  survival  of  the  mediseval  law  of  tenure,  the  hab- 
its and  customs  which  have  grown  up  about  that 
law,  and  the  reluctance  of  a  conservative  people  to 
yield  those  habits  and  customs  to  the  progressive 
demands  of  industry ;  that,  therefore,  the  great  ad- 
vantages which  are  possessed  by  America  f oi'  setting 
herself  in  the  van  of  civilization  are  that  she  is 
already  divested  of  the  older  and  more  serious  clo^s 
which  surround  progress,  in  the  freedom  of  aliena- 
tion of  her  land,  and  in  the  fact  that  the  law  of  the 
land  has  come  here  to  assimilate  itself,  in  the  habits, 


386  INDUSTRIAL   LIBERTY 

in  tlie  tliouglits,  aud  iu  the  legislation  of  tlie  people, 
Avitli  what  Maiue  calls  the  law  of  the  market.  In 
view  of  this  progress,  A\'liich  has  been  one  of  evolu- 
tion, the  evolution  toward  freedom,  it  seems  some- 
what inconsistent  that  Mr.  Spencer  should  claim 
for  the  tenure  of  land  a  treatment  different  from  that 
to  be  given  the  tenure  of  all  other  species  of  prop- 
erty over  which  ownership  can  be  predicated.  He 
claims  government  ownership  of  land  as  one  of  the 
pre-requisites  of  freedom,  and  insists  upon  the  abo- 
lition of  all  private  title.  From  the  unanswerable 
postulate  of  liberty  that  "  each  man  has  freedom 
to  do  what  he  wdlls,  provided  he  infringe  not  the 
equal  freedom  of  every  other,"  he  draws  this  conclu- 
sion : 

"  Equity  does  not  permit  property  in  land.  For  if  one 
portion  of  tiie  earth's  surface  may  justly  become  the  pos- 
session of  an  individual,  and  may  be  held  by  him  for  his 
sole  use  and  benefit,  as  a  thing  to  which  he  has  an  exclu- 
sive right,  then  other  portions  of  the  earth's  surface  may 
be  so  held,  and  eventually  the  whole  of  the  earth's  sur- 
face may  be  so  held  ;  and  our  planet  may  thus  lapse 
altogether  into  private  hands.'" 

But  is  this  conclusion  warranted  by  the  postulate  ? 
It  seems  to  me  as  plain  as  that  two  men  cannot  occupy 
the  same  ground  at  the  same  time,  that  there  must  be 
some  recog-nition  in  real  freedom  of  that  rio;ht  which 
comes  from  previous  acquisition ;  in  other  words, 
that  the   recognition  of   the  freedom  of  others  in- 

'  "Social  Statics,"  New  York,  1S70,  p.  132. 


ENGLAND  AND  AMERICA  387 

eludes  the  recognition  of  the  precedent  acts  of  ac<{iii- 
sition  of  others,  provided  those  acts  of  acquisition 
were  made  in  accordance  with  the  law  of  the  free- 
dom to  acquire  ;  and  that  the  holder's  right  to  this 
recognition  cannot  be  negatived  by  State  ownership 
or  control.  It  is  irrelevant  to  the  argument  that,  as 
Mr.  Spencer  claims,  title  was  formerly  acquired  by 
violence,  fraud,  the  prerogative  of  force,  and  the 
use  of  superior  cunning,  since  the  same  may  be 
said  of  the  acquisition  of  personal  property  and  of 
supremacy  of  any  kind.  The  question  of  present 
right,  the  principles  \vhich  should  govern  present 
holding,  cannot  be  determined  by  conditions  which 
surrounded  holding:  iu  other  stao-es  of  civilization. 
It  is  a  question  of  what  conduces  to  the  largest 
freedom  to-day,  of  what  conduces  to  the  sum  of  the 
freedom  of  the  world.  Mr.  Spencer  seems,  there- 
fore, to  some  extent,  to  have  lost  sight  of  the  appli- 
cation of  that  principle  of  Natur-reclit  by  which  he 
justifies  the  performance  of  those  acts  in  civilization 
which  conduce  most  normally  and  largely  to  the 
well-being  of  mankind,  \vhich  for  this  reason  are  to 
be  regarded  as  natural  rights  and  the  justification 
for  those  liberties  and  those  claims  which  render  the 
progress  of  civilization  most  possible.  The  attach- 
ment for  home  is  as  deep-seated  as  any  that  mankind 
is  capable  of  forming.  Whilst  it  is  this  attachment 
which  distinguishes  civilized  nations  from  the  no- 
madic types,  it  is  also  this  which  is  common  to  the 
owner  of  the  Kaffir  hut  and  the  owner  of  the  palace ; 


388  INDUSTRIAL   LIBERTY 

and  the  gratification  of  this  attachment,  which  is 
essentially  accompanied  with  a  desire  for  possession 
and  ownership,  falls  as  plainly  within  the  conception 
of  natural  I'iohts  as  the  illustrations  which  Mr. 
Spencer  so  clearly  sets  forth  in  support  of  other 
natural  rights,  wherein  his  conclusion  is  that  these 
rights  originated  "  in  recognition  of  the  truth  that  if 
life  is  justifiable,  there  must  be  a  justification  for 
the  performance  of  acts  essential  to  its  preservation, 
and  therefore  a  justification  of  those  liberties  and 
claims  which  make  such  acts  possible." 

The  objection  to  Mr.  Spencer's  position  is  partly 
upon  the  ground  that  government  o^^^lership  and  im- 
mediate control,  supplanting  private  ownership,  of 
necessity  involves  paternal  functions  and  throws  upon 
the  state  multitudinous  details  entirely  inconsistent 
with  simple  non-paternalism ;  that  it  affords  oppor- 
tunity for  cupidity  and  dishonesty;  temptations, 
not  only  to  the  administrative  officer,  but  also  to 
the  lessee,  or  whoever  he  may  be,  who  comes 
into  competitive  conflict  with  other  lessees  in  dealing 
with  such  officer.  The  chief  objection  to  his  posi- 
tion, however,  arises  from  the  fact  that  government 
ownership  tends  to  interfere  with  that  equality  of 
individual  incentive  upon  which  Mr.  Spencer  in 
other  places  sets  so  great  and  so  appropriate  a  stress. 
It  is  only  by  private  ownershij:>,  supported  by  the 
constant  freedom  of  alienation  in  the  owner  in  esse, 
that  individual  incentive  can  be  preserved.  When 
incentives  for  acquisition  are   unimpaired,  we  may 


ENGLAND   AND   AMERICA  389 

depend  upon  a  distribution  of  land  in  accordance 
with  the  demands  of  the  generation  in  being ;  we 
may  depend  upon  a  well-established  public  policy 
whose  supreme  motive  shall  be  to  keep  the  world 
and  its  fruits  for  the  fullest  enjoyment  possible  of 
that  generation,  thus  enabling  it  to  hand  down  its 
achievements  to  the  generation  succeeding,  not  only 
unimpaired  but  improved  in  quality.  This,  and 
this  only,  lies  in  accord  with  the  solicitude  of  nature 
for  the  preservation  of  individual  incentive. 

The  law  of  land,  therefore,  may  be  expressed  just 
as  the  law  of  personal  property  is  expressed,  in  the 
freest  use  bv  the  owner  in  esse  and  the  encourao;e- 
ment  of  that  freedom  in  accordance  wdth  the  equal 
incentive.  The  truest  law  of  land  tenure,  then,  will 
provide  for  freedom  of  alienation,  Just  as  the  freedom 
of  personal  property  involves  freedom  of  barter. 
This  will  be  accomplished  by  obliterating  the  dis- 
tinctions between  the  right  to  land  and  the  right  to 
anything  else ;  and  this  course  will  produce  the 
largest  freedom  of  use  for  the  generation  in  being 
that  is  consistent  with  the  preservation  of  equal  in- 
centives, a  freedom  limited  only  to  the  extent  of  re- 
straining the  right  to  bequeath  to  those  who  come 
within  the  personal  affections  of  the  owner  of  the 
property,  a  limitation  which,  as  it  is  necessary  for 
the  equalization  of  the  incentives,  is,  as  I  have  here- 
tofore shown,  more  of  an  amplification  than  a  restric- 
tion. 

In  the  progress  of  human  activity,  stimulated  by 


390  INDUSTRIAL   LIBERTY 

modern  invention,  I  believe  that  man's  intelligence  is 
destined  to  play  a  more  prominent  part  in  the  science 
of  government  and  of  life  than  it  has  ever  done  here- 
tofore. I  base  this  belief  upon  the  stimulus  which  this 
intelligence  receives  from  these  dynamic  forces — the 
inventions.  As  each  invention  requires  a  higher  de- 
gree of  skill  in  its  application,  a  higher  degree  of 
intelligence;  in  this  direction  is  produced ;  and  from 
the  many  inventions,  a  general  imj^rovement  of  skill 
must  result.  Man,  therefore,  will  come  to  be  more 
capable  of  directing  the  forces  of  nature  which  are 
susceptible  of  direction,  and  thereby  capable  of  more 
clearly  discerning  those  natural  laws  which  must  be 
obeyed.  I  think  there  is  a  higher  degree  of  hope  for 
intellectual  movement  and  intellectual  influence  in 
the  progress  of  evolution  than  ]\Ir.  Spencer  him- 
self is  altogether  willing  to  concede.  One  of  the 
mistaken  conclusions  usually  drawn  from  the  the- 
ory of  evolution  is,  that  in  considering  man's  re- 
lation to  force,  its  advocates  are  disposed  to  place 
too  much  stress  upon  the  permanency  of  the  power 
of  dynamic  forces  over  man's  intellect.  What  has 
conduced  most  largely  to  this  conclusion  is  tlie  im- 
mense j)otency  of  the  material  and  mechanical  forces 
which  have  come  into  being  during  the  last  fifty 
years,  creating  an  unprecedented  force  of  things  in 
themselves.  It  is  the  irresistible  momentum  of  these 
forces  which  seems  to  have  impressed  upon  some  of 
the  philosophers  of  evolution  the  smallness  of  human 
intelligence  as  a  factor  in  civilization.     This  view  has 


ENGLAND   AND  AMERICA  391 

iiriseu  from  the  circumstance  that  as  we  look  around 
us  and  see  the  overwhelming  force  of  these  material 
and  mechanical  factors,  and  note  the  inadequacy 
of  man's  recent  efforts  to  adapt  them  to  human 
liberty,  ^v'e  are  impressed  with  the  magnitude  of 
the  iniluence  of  the  one,  and  the  minuteness  of 
the  influence  of  the  other.  This  conclusion  is  one 
which  Mr.  Spencer  himself  has  to  some  extent 
accepted  in  summing  up  the  influence  of  sociol- 
ogy. He  says  that  "  the  man  of  higher  type  must 
be  content  with  greatly  moderated  expectations 
while  he  perseveres  in  undiminished  efforts.  He 
has  to  see  how  comparatively  little  can  be  done, 
and  yet  to  find  it  worth  while  to  do  that  little ;  so 
uniting  a  philanthropic  energy  with  a  philosophic 
calm."  There  is  thus,  meliorist  as  he  is,  a  certain 
tone  of  discouragement  pervading  his  general  con- 
clusions of  the  relative  rate  of  intellectual  growth 
which  accompanies  evolution.  He  estimates  man's 
j)rogress  as  smaller  than  it  is  likely  to  be.  A 
more  hopeful  and  at  the  same  time  a  more  justifiable 
view  of  his  progress  is  that  derived  from  the  con- 
clusion that  this  latest  force  and  gift  to  humanity  is 
exerting  a  revivifying  influence  upon  the  human  in- 
tellect, and  especially  upon  individuality;  that  its 
potency  over  man's  endeavors  at  last  only  comes  to 
stimulate  him  into  a  larger  sense  of  being ;  and  that 
we  may  therefore  look  for  an  enlarged  result  from 
the  increased  advancement  and  immense  improve- 
ment in  machinery — a  result  exhibiting  the  increase 


392  INDUSTRIAL   LIBERTY 

of  Liimau  faculty,  the  iiiiiuence  of  intellectual  power 
which  shall  appropriate  to  civilization  and  make 
subservient  to  human  freedom  and  to  justice  that 
very  force  which  has  hitherto  been  hostile  to  indi- 
vidual growth. 

It  must  be  admitted  that  ^ve  have  hitherto  been 
aiding  the  dynamic  force  in  its  tendency  to  repress 
individuality  rather  than  opposing  it.  We  have 
done  this  by  our  persevering  use  of  ai-tificial  meth- 
ods constructed  in  imitation  of  the  mechanism  which 
characterizes  that  force  ;  and  nowhere  more  signally 
and,  it  seems  to  me,  more  hurtfully  than  in  adopting 
a  system  of  compulsory  training  which  is  wholly 
empirical,  because,  for  the  most  part,  it  not  only  ig- 
nores, but  interferes  with,  the  individual  differences 
of  character  and  temperament  of  the  recipients,  and 
thus  works  counter  to  the  known  laws  according  to 
which  intellectual  faculties  are  distributed.  But  as 
the  bark  of  the  forest  tree  grows  more  hardy  and 
rugged  because  of  the  necessity  under  which  it  lies 
of  resisting  the  severest  |)art  of  the  winter  storm,  so 
we  may  hope  that  these  very  obstacles  and  interru})- 
tions  to  the  growth  of  individuality  will  enable  it 
finally  to  overcome  them.  It  is  thus  that  man's  in- 
telligence may  gi'ow  more  vigorous  from  the  very 
discipline  through  which  it  has  passed  in  the  contest 
for  supremacy  between  the  dynamic  and  intellectual 
forces,  and  the  degree  of  intellectual  growth  ^^'ill 
in  some  measure  be  proportioned  to  the  degree  of 
severity  of  this  discipline.     When  we  shall  arrive 


ENGLAND  AND  AMERICA  393 

at  the  conclusion  of  this  larger  contest  now  going  on ; 
when  we  shall  have  accomplished  the  subjugation  of 
the  dynamic  force  to  the  law  of  freedom,  we  may 
expect  for  the  race  a  capacity  which  will  enable  it 
to  adjust  to  this  law  the  new  and  improved  meth- 
ods that  shall  spring  from  industrial  progress.  This 
expectation  accords  with  the  scientific  tendency  of 
the  age.  Hitherto  mankind  in  its  progress  has 
learned  more  from  failures  than  from  successes ; 
but  we  may  hope  that  with  an  increase  of  intel- 
lectual vigor  we  shall  be  able,  in  advance,  to 
measure  failure  and  success  by  those  rules  and 
principles  which  secure  us  freedom,  founded  upon 
justice  first,  and  all  things  else  afterwards.  When 
this  time  comes,  we  will  be  able  to  look  backward 
and  estimate  at  their  true  worth  the  makeshifts  of 
the  past.  We  shall  realize  that  in  the  government 
of  a  free  people,  benevolence  and  indulgence  have  no 
place  ;  that  no  political  privilege  can  be  granted,  no 
political  right  denied  ;  that  all  legislation  must  accord 
with  the  standard  of  exact  justice  ;  and  that  benevo- 
lence, which  in  the  private  citizen  is  one  of  the  high- 
est virtues,  is  in  the  State  one  of  the  most  dangerous 
vices. 

Industry,  re-inforced  as  it  has  been  by  steam  and 
the  inventions,  constitutes  a  dynamic  potency  alto- 
gether without  parallel  in  history,  and  it  is  but  in  the 
first  stages  of  its  political  accomplishment.  The 
ultimate  is  industrial  liberty  for  the  world,  and  this 
can  only  be  secured  through  democracy.    If  it  remains 


394  INDUSTRIAL   LIBERTY 

for  the  Anglo-Saxon  i-ace  to  lead  the  way  to  this  de- 
mocracy, the  only  (juestioii  \vill  be  whether  England 
or  America  is  to  be  the  leader.  England  has  hitherto 
rather  assumed  thisleadei'ship  in  civilization ;  but  the 
power  and  disposition  of  her  hereditary  classes  tend  in 
some  important  respects  to  retard  her  steps ;  and  so  far 
as  this  influence  has  been  prevalent  she  has  resisted 
rather  than  furthered  the  progress  of  ultimate  de- 
mocracy, and  at  the  same  time  she  has  misdelineated 
its  real  characteristics.  The  Encflish  conservative 
and  higher  social  classes  exhibit  rather  too  ready 
a  disposition  to  attribute  whatever  excesses  of 
plutocracy  America  has  lately  furnished,  to  the  as- 
sumed democracy  of  her  institutions.  A  better  an- 
alysis, however,  of  underlying  conditions  will  show 
that  these  excesses  are  but  the  parasites  of  material 
growth  ;  and  that  it  is  a  libel  upon  real  democracy 
to  call  them  her  fruits.  Besides  this,  in  the  minds 
of  many  well-wishers  there  is  a  fear  concerning 
the  permanency  of  democratic  institutions,  found- 
ed upon  the  dismal  platitude  that  history  repeats 
itself.  Some  of  the  English  writers  have  been  especi- 
ally active  within  the  last  few^  years  in  drawing  par. 
allels  between  the  democracies  of  Greece  and  Rome 
and  that  of  America,  and  in  holding  up  the  ancient 
republics  as  warnings  which  indicate  the  inevitable 
fate  of  modern  democracy.  But,  in  point  of  fact, 
the  repetition  of  history  is  to  a  considerable  extent 
a  delusion.  History  in  the  larger  sense  does  not 
repeat   itself.     No    one    century    is   like  its    prede- 


ENGLAND   AND   AMERICA  395 

cessor.  In  all  the  resemblances  of  the  past  to  the 
present  there  are  important  differences.  New  fac- 
tors constantly  make  their  appearance  for  the  first 
time  to  modify  tbe  existing  civilization,  and  so  es- 
sentially to  distinguish  it  from  its  predecessors  as  io 
make  an  analogy  misleading.  Each  age  takes  to 
itself  new  and  important  qualities,  which  had  no  ex- 
istence in  any  preceding  age.  Viewing  each  age  as 
the  sum  of  its  predecessors,  civilization  has  been  es- 
sentially pi'ogressive. 

Among  the  types  of  government  which  have  been 
thoroughly  tried  in  the  past,  democracy  is  not  one. 
In  the  meantime  each  of  the  other  types  has  had 
a  thorough  and  an  efficient  trial.  Viewing  the  gen- 
eral tendency  of  civilization  from  the  beginning, 
there  is  a  warrant,  therefore,  for  the  belief  that 
the  true  trial  for  democracy  is  yet  to  come ;  that 
this  form  of  government  is  gradually  taking  to  it- 
self those  elements  of  permanency  which  it  never 
possessed  before. 

In  undertaking  an  analogy  between  Hellenic  and 
Koman  democracy,  on  the  one  hand,  and  that  which 
is  struggling  for  expression  in  America  to-day,  on  the 
other,  one  cannot  but  be  struck  with  the  utter  un- 
likeness  between  the  ancient  and  the  modern  types 
in  all  that  j'elates  to  industry.  Nothing  is  so 
characteristic  of  the  Grecian  and  Roman  democra- 
cies as  the  abject  servitude  in  which  all  industry 
was  held,  and  the  corresponding  predominance  in 
which    the    military    spirit    prevailed.       Contempt 


396  INDUSTRIAL   LIBERTY 

was  universally  felt  aud  sliovvn  for  all  industrial 
pursuits,  and  this  was  especially  the  case  among 
tlie  Greeks.' 

While  human  nature,  generally  speaking,  has  like 
characteristics  in  each  age,  the  conditions  which  sur- 
round it  change.  The  relation  of  the  individual 
towards  the  concensus  of  individuals,  called  the  gov- 
ernment, whether  that  government  be  a  monarchy, 
an  aristocracy,  or  a  republic,  has  essentially  new 
features  at  each  succession ;  and  the  change  has  not 
been  a  capricious  one ;  it  has  been  persistent  and  in 
one  direction  under  the  constant  law  of  evolution — 
interrupted  at  times,  lapsing  at  times,  but  reasserting 
itself,  overcoming  the  interruptions  and  obstacles, 
and  proceeding  in  its  fixed  course.  Democracy 
may  be  described  to-day  in  the  same  terms  that 
were  employed  by  Perikles.  Human  frailties  may 
be  described  in  the  same  terms  now  as  then.  But 
this  relation  of  the  individual  toward  his  govern- 
ment, by  reason  of  the  intervening  influences,  has 
essentially  changed  ;  and  the  changes  are  all  of  a 

'  "  It  is  observable  that  in  the  cities  of  Greece,  especially  those  whose  prin- 
cipal object  was  war,  all  lucrative  arts  and  professions  were  considered  un- 
worthy of  a  freeman.  '  Most  arts,'  says  Xenophon  (Memorabilia,  Bk.  V.). 
'  corrupt  and  enervate  the  bodies  of  those  that  exercise  them  ;  they  oblige 
them  to  sit  in  the  shade,  or  near  the  fire.  They  can  find  no  leisure,  either 
for  their  friends  or  for  the  republic'  It  was  only  by  the  corruption  of  some 
democracies  that  artisans  became  freemen.  This  we  learn  from  Aristotle 
{Polit.,  Bk.  III.,  ch.  iv  ),  who  maintains  that  a  well  regulated  republic  will 
never  give  them  the  right  and  freedom  of  the  city. 

"  Ih  fine,  every  kind  of  low  commerce  was  infamous  among  the  Greeks  ; 
as  it  obliged  a  citizen  to  serve  and  wait  on  a  slave,  on  a  lodger,  or  a  stran- 
ger.    This  was  a  notion  that  clashed  with  the  spirit  of  Greek  liberty  ;  hence 


ENGLAND   AND   AMERICA  39/ 

cliai'aeter  ^vllicll  tend  to  confer  national  longevity 
and  political  and  industrial  equality.  There  does 
not  ajjpear  to  have  been  the  slightest  conception 
among  the  Greeks  or  the  Romans  of  the  dignity  of 
industry,  or  of  its  iuiiuence  toward  the  promotion 
of  political  equality.  They  dreamed  of  no  material 
bond  of  union  from  this  source.  Neither  the  Grecian 
nor  the  Roman  republic  conceived  of  any  thing  like 
a  federation  upon  ecpial  terms.  They  coidd  there- 
fore entertain  no  idea  of  the  prevalence  of  industry, 
or  the  entire  subjection  of  militancy  to  it.  When 
these  essential  differences  are  considered,  it  must  be 
plain  to  any  one  wdth  a  moderate  capacity  for  right- 
thinking,  how  impossible  to  the  Greek  or  to  the 
Roman  was  such  an  idea  as  the  federation  of  our 
thirteen  States,  beginning  with  a  population  of  three 
millions  of  people,  and  growing  within  a  hundred 
years  into  thirty-eight  States  with  a  population  of 
sixty  millions,  ^vith  but  one  civil  war  in  the  century 
to  interfere  with  the  progress  of  that  growth,  and 
that  war  brought  about  to  eradicate  an  evil  which 
was  a  legacy  from  a  preceding  type  of  civilization — 
a  war  which  had  its  motive  in  furthering  the  security 
and  perpetuity  of  the  federation. 

Plato  (Bk.  XI.),  in  his  laws,  orders  a  citizen  to  be  punished  if  he  attempts 
to  concern  himself  with  trade. 

"  Thus  in  the  Greek  republics  the  magistrates  were  extremely  embar- 
rassed. They  would  not  have  the  citizens  apply  themselves  to  trade,  to 
agriculture,  or  to  the  arts,  and  yet  they  would  not  have  them  idle.  They 
found,  therefore,  employment  for  them  in  gymnic  and  military  exercises  ; 
and  none  else  were  allowed  by  their  institution."  (See  "  Spirit  of  Laws," 
Montesquieu,  Book  IV.,  Chap.  8.) 


39^  INDUSTRIAL    LIBERTY 

As  in  contrast  Avitli  England,  then,  our  advantages 
seem  to  be  the  greater;  but  in  both  England  and 
America  a  great  deal  yet  remains  to  be  accomplished. 
In  our  progress,  as  we  have  seen,  there  are  many  deter- 
rents, not  the  least  of  which  is  a  sentimental  reverence 
for  old  orders  joined  with  the  fear  of  retrogression  in 
the  substitution  of  political  right  for  hereditary 
privilege.  There  are  many  whose  minds  are  pre- 
occupied with  memories  and  regrets,  who  fancy  that 
we  are  passing  from  a  better  stage  to  a  worse,  and 
who  reverence  the  past  all  the  more  on  account  of 
their  ever-increasing  dread  of  the  unknown  future. 

Sixty  years  ago  the  Poet-laureate  dreamed  of  a  fu- 
ture for  the  race,  the  consummation  of  which  was 
that  "the  common-sense  of  most  shall  hold  the 
fretful  realm  in  a^ve."  Sixty  years  after,  revisiting 
the  scene  of  his  early  inspiration,  finding  the  dream 
unrealized,  the  illusion  broken,  the  idol  shattered, 
he  exclaims : 

"  Poor  old  Heraldry,  poor  old  History,  poor  old  Poetry,  passing 
hence, 
In  the  common  deluge  drowning  old  political  common-sense  !  " 

When  we  consider  that  no  preceding  century  has 
been  signalized  by  anything  like  the  degree  of  physi- 
cal change  which  has  marked  the  past  twenty-five 
years  we  may  realize  the  weight  of  these  regrets. 
Among  those  who  are  lingering  in  the  march  of  civil- 
ization many  have  passed  the  meridian  of  life ;  these 
come  by  habit  of  thought  to  live  in  the  past,  and 


ENGLAND   AND   AMERICA.  399 

mourn  that  it  is  irremeable  ;  aud  there  seems  to  them 
no  possible  compensation  for  the  changes  which  are 
so  rapidly  taking  place.  They  see  in  these  changes 
nothing  but  destruction ;  the  breaking  down  of  asso- 
ciations, the  shattering  of  ideals.  To  them  there 
appears  to  be  nothing  whatever  that  indicates  the 
removal  of  the  barriers  to  human  freedom — nothing 
but  vandalism  aud  irreverence,  which  bring  unmiti- 
gated and  immitigable  loss.  Nevertheless,  the  sure 
years  are  slowly  revealing  the  deep  remedial  process 
which  underlies  all  facts,  and  the  transitions  which 
thus  seem  to  them  without  compensation  are  the  as- 
surances to  the  incoming  generations  of  the  beginning 
of  a  larger  civilization.  If  art  is  dwindling,  science 
is  growing ;  if  the  graces  of  life  are  not  now  flourish- 
ing at  their  best,  a  new  foundation  is  being  laid  for 
them.  In  the  progress  of  the  change  we  are  falling 
back  upon  a  new  fundamental  basis ;  and  although  it  is 
not  to  be  expected  that  in  the  process  of  the  construc- 
tion of  the  foundation,  art  and  grace  will  flourish, 
we  must  remember  that  these  are  the  flowerings  which 
grow  upon  the  superstructure,  and  that  they  will 
be  all  the  more  perfect  by  reason  of  the  truer  and  bet- 
ter conditions  which  shall  be  made  for  their  growth. 
It  is  not  too  much  to  hope,  therefore,  that  the 
man  who  will  be  the  product  of  the  next  civilization 
will  be  a  fairer  development  than  any  the  world  has 
yet  seen.  If  real  democracy  can  be  attained,  he  will 
be  the  one  to  prove  his  title ;  not  bv  immemorial 
claim  or  by  ancestral  achievement  secui^.;        mediae- 


400  INDUSTRIAL   LIBERTY 

val  enactment,  but  by  imprescriptible  right,  common 
to  all,  founded  upon  even-handed  justice,  and  accom- 
panied by  present  accomplishment.  He  mil  be  the 
product  of  the  race  as  the  heir  of  the  ages.  His  no- 
bility will  be  that  which  rests  upon  his  merit  and  his 
performance,  not  that  which  is  based  upon  artificial 
conditions  repressing  the  better  ([ualities  of  others. 


INDEX. 


Absolutism,  culmination  of,  in  Eng- 
land under  Henry  VIII.,  5  ;  views 
of  James  I.,  in  regard  to,  6. 

Act  of  Settlement,  6,  278. 

Adams,  C.  F.,  Jr.,  remarks  on  the 
"  Granger  Movement,"  129  ;  his 
plans  for  dealing  within  the  railway 
problem  and  their  inadequacy,  177- 
179,  182-185,  188-191  ;  his  misap- 
plication of  the  doctrine  of  laissez 
faire,  185. 

Adams,  Samuel,  influence  of,  during 
the  American  Revolution,  16  ;  called 
the  father  of  the  town-meeting,  16  ; 
his  broad  conception  of  liberty,  16. 

Adulteration  of  food,  prevention  of, 
by  government  not  paternalism, 
288,  356. 

Agricultural  interests,  effect  of  the 
tariff  upon,  227,  235,  244,  246. 

Alienation  of  land,  freedom  of,  among 
the  Anglo-Saxons,  369  n.  ;  re- 
strained in  England  by  the  Statute 
"  De  donis,"  369  n.  ;  "settle- 
ments," and  their  effect  upon,  370 
n.  ;  relation  of  freedom  of,  to  in- 
dustrial progress,  371,  3S1  ;  free- 
dom of,  in  America  and  its  results, 
3S2,  383  ;  see  Land  Tenure. 

America,  causes  of  the  early  develop- 
ment of  liberty  in,  15-21  ;  the  free- 
dom of  land  tenure  from  primo- 
geniture and  entails,  382  ;  creation 
of  titles  of  nobility  prohibited  by 
the  Constitution,  382  ;  advantages 
of,  over  England,  in  industrial 
progress,  383-3S5,  393-400  ;  her 
problem  in  the  tariff  .common-school 
system,  and  corporate  aggression, 
384. 


Angk)-Saxon,  The,  characteristics  of, 
212,  215,  216  ;  his  instinct  for 
freedom,  214  ;  his  progress  in 
America,  216-218  ;  his  method  of 
righting  wrongs,  216-220. 

Anson,  Sir  William,  his  definition  of 
a  contract,  327. 

Arminius,  the  hero  of  the  Teutonic 
race,  218  n. 

Army  and  Navy,  maintenance  of,  by 
the  government,  not  paternalism, 
287,  355. 

Arnold,  Matthew,  criticism  by  Her- 
bert Spencer,  upon  his  views  of 
natural  rights,  24  n  ;  cited,  212. 

Autonomy  of  the  States,  not  marred 
by  the  amendments  to  the  Consti- 
tution, 30  ;  nor  by  the  civil  war, 
30,  31- 

B 

Bacon,  on  the  necessity  of  studying 
principles,  2  ;  on  primogeniture 
and  entails,  372  ;  cited,  175,  213. 

Baltimore  and  Ohio  Railroad  Com- 
pany, the  methods  of  its  manage- 
ment, 113,  120. 

Bancroft,  George,  essay  of,  on  the  le- 
gal-tender decisions,  337. 

Benevolence,  in  corporation,  or  gov- 
ernment, a  violation  of  trust,  358- 
361  ;  its  tendency  to  increase  pau- 
perism and  to  mar  industrial  in- 
centive, 359. 

Bentham,  Jeremy,  vague  views  of 
liberty  set  forth  in  his  Constitu- 
tional Code,  12,  13  ;  comments  of 
Herbert  Spencer  upon,  13  ;  merits 
of  his  "  Book  on  Fallacies,"  13  n.; 
his  opposition  to  the  usury  laws, 
345- 


401 


402 


INDUSTRIAL   LIBERTY 


Berkeley,  remarks  of,  on  primogeni- 
ture,   3/2. 

Bill  of  rights,  exaggerated  estimate 
of  the  first  influence  of,  4,  5  ;  in- 
fluence of  the  Whig  party,  in  pro- 
curing, 367. 

Blackstone,  Sir  William,  his  defini- 
tion of  civil  liberty,  8  ;  wherein 
definition  is  defective,  9  ;  his  ac- 
count of  the  origin  of  the  corpo- 
ration, 219  n.  ;  his  estimate  of 
Lord  Nottingham,  88  ;  on  the 
Statute  of  Frauds,  155  n.  ;  on  the 
hardships  of  early  English  land 
tenure,  370  n. 

Blanc,  Louis,  socialistic  theories  of, 
derived  from  Montesquieu,  12. 

Bonar,  James,  citation  from,  62. 

Broadway  Railway,  motive  of  organ- 
izers of,  141  ;  ineffectual  attempt 
to  forfeit  charter  of,  332  n. 

Burke,  Edmund,  eulogy  upon  the  age 
of  chivalry,  41  ;  his  mistaken  con- 
ception of  industrial  progress,  42  ; 
estimate  of,  by  Coleridge,  42. 


Campbell,  Lord,  his  estimate  of  Lord 
Nottingham,  88  ;  remarks  of,  on 
the  Statute  of  Frauds,  155  n. 

Canning,  his  definition  of  true  states- 
manship, 208 

Carlyle,  cited;  305,  199. 

Cassat,  A.  J.,  testimony  of,  as  to  the 
relations  between  the  Pennsylvania 
Railroad  Com]iany  and  the  "  Stand- 
ard Oil  Trust,"  119  n. 

Charity,  see  Benevolence. 

Charter,  corporate,  not  a  contract  be- 
tween the  State  and  the  corpora- 
tion, 330  ;  inherent  limitations  in 
all  charters,  331  ;  results  of  treat- 
ing as  a  contract,  332  ;  forfeiture 
of,  no  remedy  for  corporate  abuses, 
332  n.  ;  obligation  of  contract,  im- 
paired by  treating  as  a  contract,  330, 
332,  335  ;  the  Dartmouth  College 
case  and  its  effects,  335  ;  features 
of  perpetuity  in,  384. 

Chicago  Gaslight  Comjiany,  wrecked 
by  the  Gas  "  Trust,"  133-136. 

Chivalry,  age  of,  Burke's  eulogy  on, 


41  ;  its  characteristics  and  their  an- 
tagonism to  industrial  liberty,  43. 
Church,  the,  power  of,  in  England 
broken  by  Henry  VIII.,  87  ;  intro- 
duction and  abuse  of  trust  by, 
79.  87,  155  ;  methods  of,  in  pro- 
moting religious  unity  compared 
with  those  of  common-school  sys- 
tem, 292-296,  322-326  ;  aims  of,  at 
first  pure  and  beneticent,  293  ;  re- 
sults of  those  aims  upon  industrial 
freedom,  293-295  ;  supremacy  of, 
broken  by  industrial  progress,  294, 

.295- 

Civil  law,  the  corporation,  adopted 
from,  384. 

Civil  liberty,  see  Liberty. 

Civilization,  best  advanced  by  the 
proper  application  of  diversified 
faculty  to  diversified  resources,  273, 
see  Democracy. 

Civil  service,  administration  of,  by 
government  not  paternalism,  288. 

Classes,  how  far  necessary  under  a 
free  government,  263-268  ;  politi- 
cal, cannot  exist  in  a  republic,  265, 
266,  2S1  ;  see  Landed  interest.  In- 
dustrial Classes,  Social  Equality. 

Coinage  of  money,  regulations  of,  by 
government    not  paternalism,   287, 

354- 

Coleridge,  his  description  of  Edmund 
Burke,  42. 

Commission,  see  Inter-State  Com- 
merce Commission  ;  see  Pacific 
Railway  commission  ;  see  Legisla- 
tive commissions. 

Common  law  of  England,  how  far  the 
basis  of  American  liberty,  14,  15. 

Commons,  House  of,  created  by  Simon 
de  Montfort,  3,  4  ;  growth  of  power 
of,  under  the  Georges,  15  ;  influ- 
ence of  the  Whig  party,  in  promot- 
ing the  independence  of,  367. 

Common-school  system,  paternalism 
involved  in,  287  ;  mere  beneficence 
of  aim  no  justification,  289,  290; 
the  value  of,  to  be  tested  by  results, 
290,  291  ;  objections  to,  measured 
liy  the  standard  on  industrial  free- 
dom, 2gi  ;  its  policy  of  unequal  ex- 
action, 291,  300,  304  ;  Us  interfer- 
ence with  jiaternal  duty,  291,   3CX), 


INDEX 


403 


303  ;  its  tendency  to  unify  faculty, 
291,  301  ;  comparison  of  its  methods 
with  those  adopted  by  tlie  Church 
for  the  unity  of  faith,  292-296,  321- 
326  ;  efforts  of  Horace  Mann  in  be- 
half of,  296-299  ;  effect  of  its  uni- 
form methods,  298,  299  n;  socialistic 
features  of,  301  ;  effect  of,  in  ignor- 
ing individual  adaptation,  303-305  ; 
how  far  statistics  may  be  used  to 
show  the  effects  of,  310-313  ;  results 
of,  as  shown  by  these  statistics,  310, 
n-.  3^3-315.  31S-321  ;  the  failure  of 
the  compulsory-attendance  feature, 
317-320  ;  the  gradual  progress  of  the 
system  toward  the  police  depart- 
ment of  government,  320,  321;  its 
ultimate  outcome  the  repression  and 
loss  of  individualty,  322,  392  ;  the 
abolition  of,  and  its  probable  mode 
of  accomplishment,  323-326  ;  results 
to  civilization  promised  by  its  ad- 
vocates, 310-316  ;  these  results  after 
fifty  years  of  trial,  310-316,  317- 
322  ;  features  of  perpetuity  in,  384. 

Competition,  effect  of  the  discovery  of 
steam  upon,  47  ;  necessary  to  the 
preservation  of  incentive,  47. 

Compulsory  education,  see  Common- 
school  system. 

Communism,  see  Socialism. 

Constitution  of  the  United  States, 
manner  of  framing,  17-19  ;  qualiii- 
cations  of  the  framers  of,  18,  19  ; 
strengthened  by  the  early  interpre- 
tations of  the  Supreme  Court,  20; 
how  far  it  affords  a  definition  of  in- 
dustrial liberty,  27,  29,  33  ;  indivi- 
dual sovereignty  not  fully  recog- 
nized by,  32,  35  ;  autonomy  of  the 
States  not  affected  by  the  amend- 
ments to,  30  ;  probable  necessity 
for  amendment  of,  to  correct  copo- 
rate  abuses,  211,  erroneous  con- 
struction of,  in  the  Dartmoutii 
College  case,  335  ;  erroneous  con- 
struction of,  in  the  legal-tender 
decisions,  337. 

Contract,  freedom  and  sanctity  of,  es- 
sentials of  industrial  liberty,  28,  328  ; 
interference  with,  of  paternalism, 
287  ;  constituent  elements  of  a  con- 
tract,   327  ;  corporate  charters  not 


entitled  to  (see  Charter),  86,  330- 
336  ;  effect  of  the  Dartmouth  Col- 
lege case  upon  (see  this  topic), 
336  ;  the  violation  of,  in  the  Legal- 
tender  decision,  (see  this  topic)  31, 
336-341  ;  impaired  by  usury  laws, 
(see  this  topic)  344-344. 

Convicts,   see  criminal  classes. 

Corn  laws,  conditions  leading  to  the 
repeal  of,  45,  250,  368. 

Corporations,  origin  of  in  the  Roman 
law,  155.,  219  ;  measure  of,  by  the 
definition  of  industrial   liberty,  37, 

73  ;  methods  employed  by,  for  the 
violation  of  individual  right,  54,  57  ; 
analysis  of  the  quasi-public  corpora- 
tion, 73  ;  iinrepublican  character  of, 

74  ;  substantially  a  perpetuity  and  a 
monopolist,  74, 147  ;  effect  of  the  un- 
limited control  possessed  by  its  of- 
ficers, 75,  76  ;  relation  to  the  share- 
holders, one  of  trust,  77,  78,  84  ; 
quasi-public  corporation,  essential- 
ly a  public  corporation,  80,  81  ;  the 
larger  and  lesser  trust  involved  in  a 
corporate  franchise,  84,  85  ;  the 
duties  of  the  corporation  to  the 
public,  77,  78,  82,  86,  92,  93,  98  ; 
results  of  the  failure  to  recognize 
the  trust  relation  involved  in  a 
corporate  charter,  93,  94,  151  ;  the 
"parasite"  corporation  in  railway 
management,  103  ;  responsibility 
for  corporate  mismanagement,  no, 
199  ;  no  hope  of  reform  from  with- 
in, 149,  175-177  ;  gradual  en- 
croachments of,  154  ;  necessity  for 
legislative  interference.  155  ;  objec- 
tions to  State  ownership  of  quasi- 
public  corporations,  T50.  353  ;  pri- 
vacy, not  a  right  of  the  cpiasi-public 
corporation,  173  ;  the  outcome  of 
the  struggle  between  corporate  ag- 
gression and  industrial  liberty,  218, 
221,  390-398  ;  supervision  of,  by 
government,  not  paternalism,  287  ; 
abuses  resulting  from  treating  char- 
ter of,  as  contract,  332  ;  see  Rail- 
way corporations,  "  Trusts." 

"  Cotton-Seed  Oil  Trust,"  its  relation 
to  the  "Standard  Oil  Trust,"  170, 

171- 
Courts,  their  present  inability  to  deal 


404 


INDUSTRIAL   LIBEKTY 


witli  corporate  abuses  and  "  trusts," 
148,  149,    159,    169,    170,    173,  209. 

Credit  Mobilier,  connection  with  the 
construction  of  the  Union  Pacific 
Railway,  129. 

Criminal  classes,  how  far  statistics  of, 
may  be  used  to  show  tlie  effect  of 
the  common-school  system, 310-313; 
what  these  statistics  show,  313- 
315  ;  see  Police  functions. 

Cromwell,  Oliver,  his  view  of  divine 
right  of  kings,  277. 


D 


Dartmouth  College  case,  perversion 
of  its  real  meaning,  86  ;  criticism 
upon  decision  of,  330-336  ;  emo- 
tional character  of  Webster's  argu- 
ment in,  336  n. ;  responsibility  of 
decision  in,  for  corporate  aggres- 
sion, 332-335  ;  see  Charter. 

Declaration  of  Independence,  27,  28  ; 
confusion  in,  of  jiolitical  with  social 
equality,  27,  23,  253  n. 

"  De  donis,"  statute  of,  effect  of,  upon 
alienation    of     land     in     England, 

369  n- 

Delegated  powers,  see  Legislation. 

Democracy,  the  ultimate  of  civiliza- 
tion, 393-399  ;  political  and  not 
assumed  social  equality,  the  basis 
of,  395-399  ;  erroneous  conceptions 
of,  in  the  republics  of  Greece  and 
Rome,  395,  396. 

De  Tocqueville,  cited,  66. 

Direct  taxation,  see  'J'axation. 

Discriminations  by  corporations, 
methods  of,  187  ;  paternalism  in- 
volved in,  2S6  ;  see  Rebates,  "  Un- 
derbilling. " 

Distribution  of  faculty,  see  Diversity 
of  faculty. 

Distribution  of  ])opu]ation,  see  Popu- 
lation. 

Distril)ution  of  land,  see  Alienation 
of  land. 

Diversity  of  faculty,  a  persistent 
natural  law,  255  ;  necessity  for 
grades  in  the  industrial  classes,  256  ; 
generalizations  of  (^uetelet  in  proof 
of  the  law  of,  257,  258  ;  relation  of 
the    law  of,   to    political    freedom, 


262-266 ;  cfTect  of  the  failure  to 
recognize  the  law  of,  266. 

Diversity  of  resources,  nature's  law 
of,  in  relation  to  protection,  271  ; 
See  Natural  resources. 

Divine  right  of  kings,  theory  of,  under 
the  Stuarts,  6;  William  Penn's  belief 
in,  9  ;  survival  of  belief  in,  in  mod- 
ern legislation,  275,  2S2-284  ;  be- 
lief in,  necessarily  implied  in  legis- 
lation which  attempts  to  mould 
human  faculty,  255,  274 ;  the 
source  of  paternalism.  266,  275, 
2S2,  284  ;  origin  and  political  de- 
velopment of  the  belief  in,  276-282, 
284  ;  influence  of  the  Reformation 
on,  276  ;  theory  of,  combated  by 
Locke,  278  ;  unconsciously  con- 
ceded by  Air.  Freeman  in  his  def- 
inition of  democracy,  27S,  279  ; 
existence  of  political  classes  due  to, 
282  ;  survival  of  belief  in,  in  mod- 
ern legislation,  282  ;  the  question 
in  England  under  Charles  I.,  277  ; 
modified  in,  but  not  eradicated 
from,  .Vmerican  institutions,  281, 
282-285  ;  idea  of,  involved  in  the 
Legal-tender  decision,  339. 

Dynamic  forces,  influence  of,  in  in- 
dustrial progress,  390-392  ;  the 
ultimate  supremacy  of  intellectual 
force  over,  393-399- 


Economics,  complexity  of  data  in- 
volved in,  I  ;  suggestion  for  proper 
method  of  investigation  of,  2  ;  tend- 
ency of  writers  on,  to  confuse  re- 
sults and  causes,  55i  56  ;  funda- 
mental idea  of  contract  necessarily 
founded  in  the  laws  of,  328. 

Education,  see  Common-school  sys- 
tem. 

Electricity,  effect  of,  upon  industry  ; 
sec  Steam, 

Emerson,  R.  W.,  cited,  249. 

l^ninent  domain,  power  delegated  by 
the  individual,  for  specific  pur- 
poses, 94. 

Emjiire  Transportation  Comjiany,  a 
parasite  of  the  Pennsylvania  Rail- 
road Company,  121  ;  absorbed  by 
the  "  Standard  Oil  Trust,"  122. 


INDEX. 


405 


England,  historical  development  of 
the  idea  of  liberty  in,  2-17  ;  course 
of  industrial  progress  in,  as  com- 
pared with  France,  213,  214  ;  his- 
tory of  paternalism  in,  366  ;  her 
system  of  land  tenure,  and  its  effect 
upon  industrial  freedom,  369  n., 
369-372,  3S5  ;  theory  of  the  Con- 
stitution of,  378  ;  the  contest  be- 
tween the  statical  and  the  industrial 
classes,  379,  3S0  ;  America's  advan- 
tages compared  with  those  of,  in 
progress    toward   democracy,    393- 

399- 

Pintails,  historical  account  of,  in  Eng- 
lish land  tenure,  369  n.;  effect  upon 
alienation    of   land,    370-372  ;    ab- 
sence of,  in  American  land  tenure, 
,  3S2. 

Equality  of  man,  advocated  by  Adams 
and  Jefferson,  16  ;  political,  to  be 
distinguished  from  assumed  mental 
and  social,  28,  51,  255-259. 

Equity,  see  Trust. 

Erie  Railroad  Company,  methods 
employed  by  its  management,  115  ; 
its  connection  with  the  "Standard 
Oil  Trust,"  119. 

Ethics,  to  be  considered  in  discussing 
protection,  249. 

Evolution,  its  teachings  as  related  to 
the  progress  of  industrial  liberty, 
71,  185-18S  ;  the  hope  for  larger 
intellectual  growth  in  progress  of, 
390.  39 1- 

F 

Faculty,  necessity  for  diversity  and 
inequality  of,  24,  25  ;  equality  of, 
not  implied  in  political  equality,  24, 
25  ;  effort  to  mould,  survival  of  Ije- 
lief  in  theocracy,  255  ;  diversity  of, 
a  persistent  natural  law,  257,  258  ; 
illustrated  by  grades  in  industrial 
classes,  256. 

Farmer,  see  Agricultural  interest. 

Federal  courts,  limitations  of,  in  deal- 
ing with  corporate  aggressions,  209, 
210. 

Fiat  power,  what  is  involved  in  as- 
sumption of,  by  government,  256  ; 
assumption  of,  involved  in  the  legal 
tender  decisions,  338. 


Finch,  Sir  Heneage,  father  of  equity 
jurisprudence,  88  ;  his  influence  in 
settling  the  law  of  trusts,  89-91. 

Fink,  Albert,  correspondence  with 
Senate  Inter-State  Commerce  Com- 
mittee, 165  n.  ;  his  plan  for  the 
prevention  of  "  underbilling,"  ibid.; 
inadequacy  of  his  remedies  for  cor- 
porate abuses,  177-179. 

Flagler,  H.  M.,  testimony  as  to  the 
original  capital  of  the  "  Standard 
Oil  Trust,"  118  n. 

Form,  adherence  to,  as  a  plea  for  the 
continuation  of  corporate  power, 
195,  196. 

France,  abstract  idea  of  liberty  in, 
213  ;  erroneous  conception  of  lib- 
erty in,  due  to  the  influence  of  the 
men  of  letters,  213  n.  ;  course  of 
revolutions  in,  as  compared  with 
England,  214  ;  confusion  of  license 
with  liberty  in,  269. 

Franchise,  theory  upon  which  granted, 
96,  97  ;  exercise  of,  involves  trust, 
77,  78,  82,  83  ;  duties  of  legislators 
in  conferring,  98-100,  see  Charter, 
Corporation. 

Frauds,  Statute  of,  see  Statute  of 
Frauds. 

Freedom,  see  Liberty. 

Freeman,  Edward  A.,  his  account  of 
the  Anglo-Saxon  unit,  215  n.,  218 
n.  ;  dogma  of  divine  right  involved 
in  his  definition  of  democracy,  278, 
279. 

French  Revolution,  see  Revolution. 

Friendship,  see  Office 

Fundamental  principles,  necessity  for^ 
considering,  in  economic  discus- 
sion, I. 

G 

Galton,  cited,  212. 

Gas  "  Trust,"  probable  connection  of, 
with  the  "  Standard  Oil  Trust," 
130;  methods  of,  131,  132;  its 
operations  in  Chicago,  133-139. 

Giffen,  Robert,  on  the  improvement 
in  the  physical  condition  of  the 
working  classes,  58,  377. 

Government,  fundamental  principles 
of,  94,  95  ;  Locke's  treatises  upon, 
7  ;    limitation  of  taxation,  under  a 


4oG 


IND us TRIA L   LIBEK TV 


democratic,  235,  246  ;  duty  of,  to 
legislate  in  conformity  with  the 
natural  laws  of  diverse  faculties  and 
resources,  255  ;  inherent  limitation 
of  power  in,  267,  282  ;  what  con- 
stitutes free  government,  274,  284  ; 
no  room  for  privilege  in,  273,  357, 
363-365  ;  must  be  just  and  not  gen- 
erous, 275,  363-365  ;  objections  to 
management  of  railways  by,  353, 
354  ;  holds  its  property  and  power 
as  trustee  for  the  individual  citizens, 
357  I  objections  to  State  ownership 
of  land,  388. 

Granger  movement,  a  direct  retort 
against  corporate  aggression,  129  ; 
failure  of,  202. 

Greece,  erroneous  conception  of  de- 
mocracy, in  the  republics   of,  394- 

,  396- 

Green,  J.  R.,  definition  of  absolut- 
ism under  the  Tudors,  6  ;  on  the 
characteristics  of  the  Whig  party 
in  the  reign  of  Queen  Anne,  366. 


H 


Hamilton,  Alexander,  his  views  in 
favor  of  a  constitutional  monarchy, 
32. 

Henry  VIII.,  despotism  under,  5  ; 
his  confiscation  of  church  lands,  87. 

Hereditary  Classes,  see  Landed  in- 
terest. 

Hudson,  J.  F. ,  his  estimate  of  the 
original  capital  of  the  "Standard 
Oil  Trust,"  118  n.;  statement  of 
the  rebates  paid  by  the  railways, 
119  n. 

Humboldt,  Wilhelm  von,  views  on 
individuality  and  freedom,  21  n. 


I 


Immigration,  strain  of  upon  American 
institutions,  63,  64,  322. 

Incentive,  necessity  for  preserving 
equality  of,  22,  58,  59,  273  ;  fur- 
nished by  surrounding  conditions 
and  not  by  State  interference,  305. 

Index  Expurgatorius,  Montesquieu's 
"  Spirit  of  Laws"  put  in,  for  ad- 
vocating the  taking  of  interest,  344. 


Increase  of  jjopulation,  see  Popula- 
tion. 

Indian  tribes,  care  of,  by  govern- 
ment not  paternalism,  288,  356. 

Indirect  taxation,  see  Taxation. 

Individual  sovereignty,  not  fully  rec- 

\      ognized   by  the   Constitution,   32  ; 

I      an  essential  element  of  republican 

government,  94,  95  ;   violation  of, 

in   treating    corporate    charter    as 

contract,  329,  330. 

Individuality,  Humboldt's  definition 
of,  21  n.  ;  effect  of  the  steam 
factor  upon,  66  ;  development  of, 
in  the  progress  of  true  civilization, 
69,  70  ;  necessity  for,  in  a  republic, 
34,  35  ;  less  degree  of,  among  the 
French,  213,  322  ;  effect  of  com- 
pulsory education  upon,  303,  305. 

Industrial  classes,  grades  in,  shown 
by  the  United  States  census,  256, 
257  ;  necessity,  in  a  free  govern- 
ment, for  the  existence  of  these 
grades,  262. 

Industrial  corporation,  see  Corpora- 
tion. 

Industrial  liberty,  necessity  for  a  defi- 
nition of,  2  ;  historical  development 
of,  in  England  and  America,  2-21  ; 
definition  of,  to  be  partly  gathered 
from  the  Constitution  and  Declara- 
tion of  Independence,  27,  35  ;  defi- 
nition of,  28  ;  freedom  and  sanctity 
of  contract  involved  in,  28,  328  ;  its 
universal  application,  37,  38  ;  ap- 
plication of  the  definition  to  cor- 
porate methods,  150;  jirogressof  in- 
dustrial liberty,  first  aided  and  then 
impeded  by  the  discovery  of  steam, 
46  ;  comparative  progress  of,  in 
England  and  America,  49,  393-399  ; 
methods  of  the  corporation  in  vio- 
lation of  the  principles  of,  57,  75, 
78  ;  probable  outcome  of  the  strug- 
gles with  the  steam  factor,  70-72  ; 
inllucnce  of  the  English  system  of 
land  tenure  upon  the  growth  of, 
371  ;  problem  of,  in  England  as 
compared  with  America,  36,  373, 
385-399  ;  see  Liberty. 

Industrial  reform,  see  Reform. 

Industry,  see  Trade. 

Intellectual    growth,     its    ])owi'r,    in 


INDEX 


407 


evolution,  over  dynamic  influences, 
390-393. 

Interest,  see  Usury  laws. 

International  relations,  effect  of  the 
steam  factor  upon,  48. 

Inter-State  Commerce  Commission, 
origin  of,  159  ;  qualification  of  its 
members,  99,  100  ;  investigation  of 
the  Standard  Oil  Company,  of  Ken- 
tucky by,  126,  164,  165  ;  possibly 
unconstitutional,  160,  175,  its  lim- 
ited jurisdiction,  161,  209  ;  its  in- 
adequacy to  deal  with  corpt)rate 
abuses  and  "  trusts,"  161,  162,  164, 
172,  174  ;  illustrations  of  the  partial 
relief  afforded  by  its  investigations, 
165  ;  evasions  of  law  by  "  under- 
billing,"  165  n. 

Into.xicants,  regulation  of  manufac- 
ture and  sale  of,  by  government, 
not  paternalism,  288,  356. 

Inventions,  effect  of,  on  modern  in- 
dustry, 390. 

Investigation  commissions,  see  Legis- 
lative commissions. 

Irish  famine,  its  influence  in  the 
repeal  of  the  Corn  Laws,  251. 

Irish  question,  effect  of  the  steam 
factor  upon,  48  ;  freedom  of  aliena- 
tion in  land,  prerequisite  to  settle- 
ment of,  381. 

J 

James  I.,  author  of  the  "True  Law 
of  Free  Monarchy,"  5  ;  his  views 
on  absolute  monarchy,  6. 

Jefferson,  Thomas,  his  broad  concep- 
tion of  liberty,  16  ;  his  opposition 
to  slavery,  21  n.  ;  his  confidence  in 
a  republican  form  of  government, 
32  ;  indirect  taxation  favored  by, 
243  n. 

Jevons,  W.  S.,  Herbert  Spencer's 
criticism  on  his  views  of  natural 
right,  24  n. 

Juilliard  vs.  Greenman,  see  Legal- 
tender  decision. 


K 


Knights  of  Labor,  their  organization, 
a  logical  outcome  of  corporate 
aggression,   59,  60,   iii,  112. 


Laborer,  right  of  wainage  secured  to 
by  Magna  Charta,  3  ;  improvement 
in  physical  condition  of,  in  recent 
years,  58,  377  ;  ground  of  present 
discontent  of,  58,  59,  377,  378  ; 
effect  of  "  protection  "  upon,  236, 
248  ;  effect  of  lien  laws  upon,  in 
hindering  self-dependence,  352. 

Laissez  faire,  doctrine  of,  its  misap- 
plication to  the  question  of  corpo- 
rate power,  185  ;  true  idea  of, 
372. 

Land,  alienation  of,  see  Alienation 
of  land  ;  right  of  private  ownership 
in,  denied  by  Mr.  Spencer,  386  ; 
criticism  upon  his  reasoning,  386— 
388  ;  objections  to  govermental 
ownership  of,  388,  389  ;  assimila- 
tion of  the  law  of,  to  the  law  of 
personality,  379-. 3S3,  386. 

Land  Transfer  Bill,  introduced  for 
the  abolition  of  primogeniture, 
370  n. 

Landed  interest,  efforts  in  England 
to  preserve  power  of,  44  ;  "  Landed 
Property  Qualification  Act,"  44  ; 
its  power  in  political  and  social  life 
in  England,  44,  opposition  of,  to 
repeal  of  corn  laws,  250  ;  coalition 
with  the  philanthropists  in  promo- 
tion of  paternalism,  373,  374  ;  its 
opposition  to  industrial  progress, 
374.  375  !  effort  of,  to  preserve  its 
power  by  sympathetic  legislation, 
375- 

Land  tenure,  historical  account  of 
English  system  of,  369  n.,  its  earlier 
hardships,  370  n.,  its  present  effect 
in  restraining  alienation,  378  ;  its 
relation  to  the  contest  between  the 
statical  and  the  industrial  interests, 

371.  373.  379.  385- 
Larger  trust,  the  relation  between  the 

corporation  and  the  public,  84. 
Lecky,  W.  E.  H.,  citations  from,  44, 

147,  213  n,  375. 
Legal-tender     decision,     sanctity     of 

contract  violated  by,  31,  329,  330  ; 

criticism  upon.  337-344.  350-352  ; 

postulates  upon  which  it  rests,  338  : 

impairment    of    the    obligation    of 


4o8 


INDUSTRIAL   LIBERTY 


contract  by,  339,  340  ;  assumption 
of  a  fiat  power,  in  government  by, 
338-340 ;  the  mischievous  effects 
of,  342,  343,  351  ;  the  dissent  of 
Mr.  Justice  Field,   341. 

Legislation,  dithculty  in  dealing  with 
"  trusts  "  by,  79  ;  necessity  for  su- 
pervision of  corporations  by,  84  ; 
beneficence  of  aim  of,  no  justifica- 
tion for  paternal,  357-361. 

Legislative  commissions,  cause  of 
their  unsatisfactory  reports  on 
economic  disturbances,  54-57. 

Legislators,  are  trustees  for  the  indi- 
vidual citizens,  94  ;  cannot  confer 
franchises  except  subject  to  public 
right,  83,  84  ;  their  duties  in  vo- 
ting franchises,  94,  95,  gS-ioo,  330  ; 
limitation  of  the  powers  of,  94,  95, 
208  ;  source  and  extent  of  their 
power  in  a  free  government,  265, 
274,  282. 

Leicester,  Earl  of,  see  Montfort. 

Lesser  trust,  the  relation  between  the 
corporation  and  its  shareholders, 
84  ;  instances  of  the  violation  of 
this  trust,  loi. 

Liberty,  as  defined  by  Locke,  7,  8  ; 
Blackstone,  8,  9  ;  Pcnn,  9,  10  ; 
Montesquieu,  lO,  II,  12  ;  Ben- 
tham,  12,  13  ;  reasons  for  the  in- 
adecjuacy  of  these  definitions,  14  ; 
its  rapid  development  in  America, 
15,  16,  17  ;  broad  conceptions  of, 
held  by  Adams  and  Jefferson,  16  ; 
essential  elements  of,  27  ;  equality 
of  faculty,  not  implied  in,  24,  25  ; 
effect  of  the  steam  factor  upon,  67  ; 
abstract  conception  of,  nniong  tlie 
French,  213  ;  see  Industrial  lib- 
erty. 

License,  to  be  distinguished  from  lib- 
erty, 268,  269. 

Locke,  John,  his  treatises  on  civil  gov- 
ernment, 7  ;  analysis  of  his  defini- 
tion of  liberty,  8  ;  his  influence  in 
overthrowing  the  dogma  of  divine 
right,  278. 


M 


Madison,   James,   influence  of  Mon- 
tesquieu upon,  12. 


Magna  Charta,  results  of,  2,  3  ;  only 
a  foretokening  of  liberty,  3  ;  right 
of  wainage  secured  to  laborer  by,  3. 

Maine,  Sir  Henry  Sumner,  on  the 
Constitution  of  the  United  States, 
17  ;  citations  from,  94,  215,  379. 

Majority,  power  of,  its  unsatisfactory 
nature,  38  ;  limitations  of,  in  free 
government,  274. 

Malthus,  see  Population. 

Mann,  Horace,  father  of  the  com- 
mon-school system,  296  ;  his  rec- 
ommendation of  uniformity  in  edu- 
cation. 296,  298  ;  advocacy  of 
compulsory  attendance  by,  297  ;  the 
earnestness  of  his  convictions,  300  ; 
education  viewed  by  him  as  a  me- 
chanical process,  298  ;  beneficial 
results  to  civilization  promised  by, 
from  the  workings  of  his  system, 
316  ;  the  results  shown  by  fifty 
years  of  trial,  310-316,  317-322. 

Mansfield,  Lord,  his  estimate  of  Lord 
Nottingham,  1S9. 

Manufacturers,  combinations  of,  to 
limit  production  in  protected  indus- 
tries, 233. 

Mareschal,  William,  instrumental  in 
obtaining  the  great  charter,  3  ; 
character  of,   16. 

Market,  law  of  the,  assimilation  of 
the  law  of  land  to,  386. 

Mill,  J.  S.,  citations  from,  66,  245. 

Monarchy,  Hamilton's  views  in  favor 
of,  32. 

Monopolies,  fostered  by  protection, 
234  ;  corporation  the  ideal  of  mon- 
opolist, 147. 

Montesijuieu,  influence  of,in  America, 
II,  12  ;  his  "  Esprit  des  Lois,"  11, 
12  ;  proscribed  for  advocating  in- 
terest, 344  ;  his  reasons  in  sup- 
port of  slavery,  12  n  ;  contempt  of 
industry  in  Grecian  Republic,  394- 

396. 

Montfort,  Simon  de,  founder  of  the 
House  of  Commons,  3,  4  ;  charac- 
ter of,  4,  16. 

Morals,  different  code  of,  applied  to 
individual  and  corporate  transac- 
tions, 204. 

Morley,  John,  on  the  characteristics  of 
revolutions  in  France,  213  n.,  214. 


INDEX 


409 


N 


Natural  law,  workings  of  protection 
contrary  to,  238,  271  ;  futility  of 
man's  attempt  at  interference  with, 
238,  260,  261,  270  ;  diversity  of 
faculty  a  persistent,  259,  266  ;  in- 
dustrial freedom  dependent  upon 
the  use  of  faculty  and  resource  in 
accordance  with,  273  ;  interference 
of  usury  laws  with,  348. 

Natural  resources,  law  of  diversity  of, 
270  ;  legislative  attempts  to  inter- 
fere with  law  of,  270,  271  ;  pro- 
tection inconsistent  with  the  law  of, 
230,  23S,  271-275. 

Natural  rights,  Herbert  Spencer  on 
the  existence  of,  24  n  ;  387. 

Naturalization,  regulation  of,  by  gov- 
ernment not  paternalism,  355. 

Negro,  effect  of  ])aternal  legislation 
upon,  307,  308  ;  his  growth  in  self- 
dependence  when  unassisted,    309. 

New  England,  favored  by  the  tariff  at 
the  expense  of  the  South,  227, 
227  n. 

New  York  Central  R.  R.  Co.,  meth- 
ods in  management  of,  114. 

New  York  Times,  editorial  on  the 
Chicago  "  Gas  Trust,"  133  ;  its  ad- 
vocacy   of    corporate    benevolence, 

.35S; 

Nihilism,  see  Socialism. 

Nobility,  titles  of,  creation  of,  forbid- 
den by  the  Constitution,  382  ;  ef- 
fect of  this  prohibition  upon  the 
land  tenure,  382. 

Nottingham,  Earl  of,  see  Finch. 

Nullification  laws,  outgrowth  of  the 
tariff,  227,  227  n. 


O 


Obligation  of  contract,  see  Contract. 
Office,  public,  granting  from  motives 

of  friendship,  a  violation  of  trust, 

361. 
Oil    "Trust,"    see    "Standard    Oil 

Trust." 

P 

Pacific  Railway,  method  of  its   con- 
struction,  129,    130. 


Pacific  Railway  Commission,  failure 
of  its  attempt  at  investigation,  162, 
162  n. 

Paper  money,  see  Legal  Tender. 

Parasitic  corporation,  the,  its  use  by 
railway  managers,  103-105,  129  ; 
succeeded  by  the  "Trust,"  116; 
see  Railways,  "  Standard  Oil 
Trust." 

Parliament,  germ  of,  in  Saxon  institu- 
tions, 4  ;  see  Commons,  House  of. 

Paternalism,  diversity  of  faculty  not 
recognized  by,  253-258  ;  founded 
upon  a  belief  in  theocracy,  266, 
276-2S2  ;  what  constitutes,  in  a 
government,  2S6-288  ;  what  acts  of 
government  are  not,  287,  354  ;  not 
to  be  justified  by  beneficence  of 
aim,  2S9,  357-361,  393  ;  an  essential 
element  of  the  common-school  sys- 
tem, 287,  289-326  ;  efTorts  of,  in 
behalf  of  the  negro  and  their  failure, 
306-309  ;  instances  of,  in  legislative 
and  judicial  interference  with  sanc- 
tity of  contract,  327-352  ;  involved 
in  protection,  222  ;  in  the  treat- 
ment of  corporate  charters  as  con- 
tracts, 330-336  ;  in  the  Legal-tender 
decisions,  337-344  ;  in  usury  laws, 
344-349  ;  in  lien  laws,  and  class 
legislation,  352,  353  ;  exercise  of 
police  functions  not  paternalism 
(see  Police  functions),  355  ;  de- 
crease of,  in  England,  in  the  reign 
of  Queen  Anne,  366  ;  its  history  to 
the  time  of  the  repeal  of  the  Corn 
Laws,  367,  36S  ;  absence  of,  in  early 
American  legislation,  368  ;  effect 
of  the  steam  factor  upon  the 
growth  of,  372,  373  ;  relation  of  the 
growth  of,  in  England,  to  her  sys- 
tem of  land  tenure,  373. 

Pembroke,  Earl  of,  see  Mareschal. 

Penn,  William,  his  definition  of  polit- 
ical liberty,  9  ;  wherein  defective, 
9,  10. 

Penitentiaries,  see  Statistics. 

Pennsylvania  Railroad  Co.,  large 
numl^er  of  shares  owned  by  for- 
eigners, 76  ;  the  methods  employed 
by  its  management,  103,  ct  seq  : 
dealings  with  the  "  Standard  Oil 
Trust,"   121. 


410 


IND  US  TJ<IA  L   JJBER  T  Y 


I'ensions,  regulation  of,  by  govern- 
ment not  paternalism,  2S7,  355. 

Perikles,  his  definition  of  democracy, 
278,  396. 

Perpetuities,  opposed  to  political  lib- 
erty, 26  ;  quality  of,  in  quasi-public 
corporation,  74,  3S4  ;  involved  in 
the  tariff  and  common-school  sys- 
tem, 3S4. 

Petroleum  industr)-,  see  "  Standard 
Oil  Trust." 

Philanthropist,  promotion  of  paternal 
legislation  by,  359,  374. 

Plato,  cited,  396  n. 

Political  classes,  recognition  of,  by 
the   government,   paternalism,  2S6. 

Political  economists,  their  errors  in 
dealing  with  statistics,  I,  51-53. 

Political  equality,  does  not  imply 
equality  of  faculty,  253-259  ;  exist- 
ence of,  dependent  upon  the  recog- 
nition of  the  laws  of  diversity  of 
faculty  and  resources,  273. 

Folice  functions,  exercise  of,  by  gov- 
ernment not  paternalism,  355  ;  illus- 
trations of,  356,  362-365  ;  necessity 
for  strictly  defining,  356  ;  charity 
no  place  among,  357,  362. 

Pooling  system,  recofnmended  by  Mr. 
Fink,  179. 

Poor  laws,  paternalism   involved   in, 

374- 

Poor  rates,  their  effect  in  increasing 
pauperism,  361. 

Population,  law  of,  effect  of  steam 
factor  upon,  60-63,  68  ;  develop- 
ment of  the  "moral  restraint  upon 
increase,"  69. 

Potts,  J.  D.,  testimony  of,  in  refer- 
ence to  "Standard  Oil  Trust," 
122. 

Primogeniture,  abolition  of,  proposed 
by  the  Land  Transfer  bill,  370  n.  ; 
its  influence  upon  industrial  liberty 
in  England,  371,  372,  3S0  ;  absence 
of,  in  America,  382  ;  views  of  Bacon 
Berkely  and  Newman  on,  372  ;  see 
Alienation  of  land. 

Principles,  Bacon  on  the  necessity  of 
the  study  of,  2  ;  value  of  statistics 
dependent  upon  the  recognition  of, 
52,  53  ;  necessity  for  return  to,  in 
dealing  with  the  steam  factor,  71. 


Privacy,  not  a  right  of  the  quasi-public 
corporation,  173. 

Privilege,  incompatible  with  industrial 
liberty,  23  ;  no  room  for,  under  a 
free  government,  275. 

Prohibitionist,  a  necessary  adherent 
to  the  dogma  of  divine  right,  2S5. 

Properly  in  land,  see  Land. 

Protection,  the  necessity  for  attention 
to  principles  rather  than  statistics, 
222,  223  ;  the  plausibility  of  the 
tariff  system  in  its  beginning,  223- 
225  ;  its  origin  and  growth,  225- 
229  ;  regarded  at  first  as  a  tempo- 
rary expedient,  226  ;  the  grievances 
of  the  South,  227,  227  n.;  the 
"  Nullification  Laws,"  227  n. ;  effect 
of  the  War  of  the  Rebellion  upon, 
228  ;  payment  of  the  war  debt,  pre- 
text for,  228  ;  efforts  of  its  advocates 
to  change  it  from  a  temporary  ex- 
pedient to  a  principle,  230 ;  the 
fallacy  of  relying  upon  statistics  of 
development,  231,  235,  241,  242  ; 
the  protectionist's  resort  to"  trusts  " 
and  combinations  for  the  purpose 
of  limiting  production,  142,  231- 
234  ;  the  theory  of,  measured  by 
political  right,  234-239  ;  effect  of, 
upon  wages,  236  ;  effect  of,  upon 
the  agricultural  interest,  227,  235, 
244,  246,  247  ;  inconsistent  with 
the  law  of  natural  distriljution  of 
resources,  238,  271  ;  probable  re- 
sults of  reform  upon  existing  indus- 
tries, 240  ;  the  fundamental  wrongs 
involved  in,  242  ;  indirect  taxation, 
in  its  relation  to,  242-245  ;  its  rela- 
tion to  the  surplus,  244-246  ;  its 
influence    upon    the    laborer,    236, 

248  ;    political    ethics    ignored    by 

249  ;  three  stages  of  the  question 
of,  251,  252  ;  features  of  perpetuity 
involved  in,  384  ;  growing  tendency 
to  regard  principles  in  discussion 
of,  252. 

Public-lands,  infiuence  of  grants  of,  in 

developing  corporate  power,  50,  57; 

regulation   of,    by    government  not 

paternalism,  355. 
Public  ojunion,    how  far   responsible 

for     corporate     aggressions,      199- 

202. 


INDEX 


4ir 


Public   Schools,    see  Common-school 
system. 


Quasi-public  corporations,  see  Cor- 
porations. 

Queen  Anne,  development  of  the 
policy  of  non-paternalism  in  her 
reign,  366. 

Quetelet,  M.  A.,  his  generalizations 
in  proof  of  the  law  of  diversity 
of  faculty,  257-259 ;  the  import- 
ance and  accuracy  of  his  work,  259. 


R 


Railway  corporations,  reason  of  their 
rapid  growth  in  the  United  States, 
65,  66  ;  causes  of  defective  man- 
agement, 74,  75  ;  control  of,  by  the 
managers  nearly  absolute,  75,  76  ; 
are  public,  and  not  private  corpora- 
tions, 80,  81  ;  the  parasite  corpora- 
tion and  its  methods,  103,  et  seq.  ; 
profits  derived  from  the  parasite 
by  the  managers,  108-110  ;  the  case 
of  the  Western  Railway,  of  Massa- 
chusetts, loi,  102  ;  the  case  of  the 
Pennsylvania  Railroad  Company, 
103,  et  seq.,  1 14  ;  the  case  of  the 
Baltimore  and  Ohio  Railroad  Com- 
pany, 113  ;  the  case  of  the  New 
York  Central  Railroad  Company, 
114  ;  the  case  of  the  Erie  Railroad 
Company,  115  ;  the  responsibility 
for  management  of,  no,  169,  197, 
199-202  ;  objections  to  government 
control  of,  353  ;  discriminations  in 
favor  of  the  "  Standard  Oil  Trust  " 
by,  116-128,  164,  171,  172  ;  reform 
not  to  be  expected  from  the  railway 
interest,  177,  179,  180-186,  204 ; 
the  three  stages  of  the  railway 
question,  200,  207  ;  transitional 
character  of  the  railway  question, 
207  ;  the  necessity  for  realizing 
the  trust  involved  in  the  franchise 
of,  205-21  r  ;  forfeiture  of  charter 
of,  no  remedy  for  abuses,  332  n. ; 
reform  of  abuses  of,  does  not  lie  in  i 
restricting  freedom  of  contract,  \ 
334  ,  paternalism  involved  in  gov-  | 


crnmental  control  of,  353  ;  see 
Corporations,  "  Standard  Oil 
Trust." 

Rebates,  a  form  of  railway  discrimi- 
nation, 119  n. 

Reform,  industrial,  inability  of  tin- 
Inter-State  Commerce  Commissifju 
to  accomplish,  160  ;  not  to  be  ex- 
pected from  the  representatives  of 
the  corporale  interests,  175,  177, 
179-186  ;  nor  from  legislators  and 
lawyers  allied  with  them,  191-195  ; 
organized  character  of  the  evils  to 
be  dealt  with,  196  ;  opposiliun  of 
the  vested  interest  to,  197  ;  charac- 
ter of  the  remedies  to  be  applied, 
173-176  ;  responsibility  of  public 
opinion  for  corporate  abuses,  199— 
202  ;  difficulties  of  the  courts,  as  at 
present  constituted,  in  dealing  witli 
the  question  of,  209,  210  ;  probaMe 
necessity  for  an  amendment  to  tlie 
Consliuition,  21 1  ;  recognition  of 
the  trust  involved  in  the  franchi'^e,  a 
prerequisite  to,  211  ;  the  dangers 
of  delay  in,  217,  218  ;  does  not  lie  in 
forfeiture  of  corporate  charters,  332 
n  ;  nor  in  restricting  freedom  of  con- 
tract, 333. 

Reformation,  The,  its  influence  upon 
the  dogma  of  divine  right,  276. 

Reign  of  terror,  effect  of,  upon  the 
growth  of  industrial  liberty,  20,  42. 

Religion,  methods  of  the  Church  for 
preserving  unity  of,  compared  with 
those  of  the  common-school  system, 
292-295,  322-326. 

Republican  government,  fundamental 
[.rinciples  under,  94,  95. 

R  -ources,  see  Natural  resources  ;  see 
Diversity  of  resources. 

Revolulion,  American,  leaders  of,  and 
their  views  of  industrial  liberty, 
15-21. 

Revolution,  French,  effect  upon  the 
growth  of  industrial  liberty,  20, 
42  ;  brought  about  by  the  tenacity 
of  the  representatives  of  tlie  vested 
interests,  igS  ;  excesses  of,  due  to 
confusion  of  liberty  with  license. 
269  ;  its  influence  upon  paternalism, 
in  England  and  America,  367,  368 

Rice  V.   Louisville  &;  Nashville  R.R. 


412 


IND  US  TRIA  L   LIBER  T  Y 


Co.,  case  of,  before  the  Inter-State 
Commerce  Commission,  164. 

Rights  ;  see  Bill  of  rights.  Natural 
rights,  State  sovereignty. 

Romanism,  power  in  England,  broken 
by  Henry  VIII.,  87  ;  relation  of 
the  common-school  system  to  growth 
of,  323  n.  ;  see  Church. 

Rome,  erroneous  conception  of  de- 
mocracy, in  the  republic  of,  394-396. 

Self-hel]i,  tendency  of  the  common- 
scliool  system  to  mar,  305. 

Self-restraint,  development  of,  with 
the  growth  of  industrial  liberty, 
69,  274. 

"Settlements,"  see  Land  tenure; 
Alienation  of  land. 

Shareholders,  relation  of,  to  corpora- 
tions, the  lesser  trust,  84  ;  responsi- 
bility of,  for  corporate  abuses,  iq6, 
197. 

Slavery,  views  of  Montesquieu  in  favor 
of,  12  n.  ;  opposed  by  Jefferson, 
21  n. 

Smith,  Adam,  his  views  on  the  usury 
laws  changed  by  Bentham's  reason- 
ing, 346  n. 

Socialism,  the  result  of  the  violation 
of  the  laws  of  industrial  liberty,  59, 
60,  110-112  ;  due  to  tlie  confusion 
of  social  with  political  equality,  268. 

Social  contract,  to  be  distinguished 
from  the  industrial  contract  as  a 
subject  for  legislation,  269. 

Social  equality,  political  ecjuality  does 
not  imply,  255-259;  necessity  for 
existence  of  social  classes  in  indus- 
trial life,  262-265,  268. 

South  Carolina,  passage  of  the  "Nul- 
lification Laws"  by,  227. 

Southern  States,  their  tariff  grievances 
in  1828,  227,  227  n.  ;  development 
of,  when  they  became  self-governing 
after  the  civil  war,  308. 

Sovereignty,  see,  Stale  sovereignty. 
Individual  sovereignty. 

Spencer,  Herbert,  comment  on  Ben- 
tliam's  Constitutional  Code,  13  ;  his 
views  of  natural  rights,  24  n.  ;  on 
the  different  standards  of  morals, 
applied  to  corporate  and  individual 
transactions,  204,  204  n.  ;  on  the 
necessity  for  the  existence  of  social 


inequality,  263  ;  his  account  of  the 
doctrine  of  divine  right,  280  ;  his 
denial  of  the  right  to  private  prop- 
erty in  land,  386  ;  criticism  on  his 
reasoning,  386-388  ;  his  tendency 
to  underrate  the  power  of  intellec- 
tual foice  over  dynamic  influence, 

390,  391- 

"  Standard  Oil  Trust,"  its  method  of 
dealing  with  railways,  1 16-128  ;  seiz- 
ure of  the  petroleum  mterest  by, 
117,  118  ;  development  of,  gradual, 
115  ;  amount  of  original  capital,  iiS 
n.  ;  its  present  capitalization,  119  ; 
amount  of  rebates  received  from 
the  Pennsylvania  Railroad,  119  n., 
121,  122  n.;  dealings  with  the  Erie 
Railroad,  i  ig,  122  n ;  its  absorption  of 
the  parasite  corporations,  116,  122  ; 
secrecy  of  its  methods,  123-126  ; 
the  necessity  of  jniblicily  for  the 
protection  of  public  right,  127,  128  ; 
its  method  of  evading  investigation, 
125,  126,  164,  165  n.  ;  its  probable 
connection  with  the  "  Gas  Trust," 
130  ;  details  of  its  workings  as  re- 
vealed by  the  Inter-State  Commerce 
Commission,  164  ;  inability  of  the 
Commission  to  reach  the  evil,  164, 
165  n. 

State  ownership,  not  a  remedy  for 
corporate  aggressions,  149,  150.  see 
Land. 

State  sovereignty,  not  impaired  by  the 
Civil  War,  30,  31  ;  nor  by  the 
amendments  to  the  Constitution, 
30  ;  effect  of  the  legal-tender  de- 
cision upon,  31. 

Statesmanship,  Canning's  definition 
of,  208. 

Statical  class,  see  Landed  interest. 

Statistics,  misleading  tendency  of,  i, 
54  ;  investigations  of,  should  deal 
with  quality  as  well  as  quantity, 
5 '-53  ;  "ot  to  be  relied  upon  in 
discussing  jnotcction,  230,  231,  235, 
241,  242  ;  careful  us  ■  of,  by  Quetelet 
in  establishing  the  law  of  distri- 
bution of  faculty,  259  ;  how  far 
they  may  be  used  to  indicate  the 
effect  of  the  common-school  sys- 
tem, 310-313  ;  what  these  statistics 
show,  310  n..  sig-^i";.  :^i8-32i. 


INDEX 


413 


Statute  of  Frauds,  remarks  of  Black- 
stone  and  Lord  Campbell  on,  155  n. 

Steam,  discovery  of,  effect  upon  the 
progress  of  the  industrial  class,  45, 
377  ;  influence  upon  social  life,  46  ; 
application  of,  to  railway  locomotion, 
45-48  ;  tendencies  of,  for  and  against 
industrial  freedom,  46,  47  ;  dis- 
turbances produced  by,  in  the  laws 
of  economics,  47,  59,  60,  67,  68  ; 
influence  of,  upon  international  re- 
lations, 48  ;  connection  of,  with  the 
Irish  question,  48  ;  magnitude  of, 
as  a  factor  in  industrial  progress, 
50,  51;  relation  of,  to  the  law  of  popu- 
lation, 60-63;  effect  of,  upon  individ- 
uality, 66  ;  formative  character  of 
the  steam  factor,  66,  67,  6g  ;  prob- 
able result  of  the  struggle  between 
the  steam  factor  and  industrial 
liberty,  70,  71  ;  its  influence  in  the 
growth  of  paternalism,  373. 

Stuarts,  the,  despotism  in  England 
under,  5,  6. 

Stubbs,  William,  views  of  Magna 
Charta,  2,  3  ;  on  thecharacter  of  Si- 
mon de  Montfort,  4  ;  cited,  336. 

Subsistence,  means  of,  effect  of  the 
steam  factor  upon,  60,  62. 

Sumner,  Wm.  G.,  cited,  227  n. 

Supreme  Court,  iis  influence  in  estab- 
lishing the  Constitution,  20,  2i  ; 
see  Dartmouth  College  case ;  see 
Legal-tender  decision. 

Surplus,  the  cause  and  effects  of, 
244,  245  ;  what  the  existence  of, 
means,  376. 


Tariff,  see  Protection. 

"  Tariff  of  Abominations,"  227. 

Taxation,  limitation  of,  under  a  free 
government,  235,  246,  275  ;  subject 
of,  not  studied  when  the  Constitu- 
tion was  framed,  242,  243  n. ;  rela- 
tion of  protection  to  indirect,  243, 
244  ;  indirect,  favored  by  Jefferson, 
243  n.;  Washington  on,  243;  ob- 
jections to  the  system  of  indirect, 
243.  244. 

Tenure,  see  Land  tenure. 

Theocracy,  see  Divine  Right  of  Kings. 


Titles  of  nobility,  creation  of,  pro- 
hibited in  America,  382  ;  effect  ol 
this  prohibition  upon  the  land 
tenure,   382. 

Tory  party,  its  opposition  to  indus- 
trial progress,  44,  375  ;  superiority 
of  land  over  tratle,  a  maxim  of,  375. 

Town  meeting,  heritage  of,  from  the 
Teutonic  race,  219. 

Trade,  its  contest  with  the  landed  in- 
terest, 375  ;  inferiority  of,  to  land, 
a  maxim  of  the  Tory  party,  375  ; 
contempt  of,  in  the  democracies  of 
Greece  and   Rome,  394-396. 

"  True  Law  of  Free  Monarchy,"  writ- 
ten by  James  L,  5. 

Trust,  idea  of,  necessarily  involved  in 
the  exercise  of  a  corporate  fran- 
chise, 77,  78,  82,  83  ;  the  lesser  trust 
for  private  profit  between  the  corpor- 
ate managers  and  the  sharehoUier, 
84  ;  the  larger  trust  for  public  right 
between  the  corporation  and  the  pub- 
lic, 85 ;  the  limits  of  the  trust  relation 
prescrilied  in  some  of  tlie  States, 
78  n.,  78,  79;  effect  of  sucli  limitation 
upon  the  trust  involved  in  the  exer- 
cise of  a  corporate  franchise,  79  ; 
history  of  the  development  of  the 
private  trust,  8 7-9 1  ;  law  of,  estab- 
lished by  Lord  Nottingham,  88  ; 
necessity  for  applying  this  law  to 
the  holders  of  a  corporate  franchise, 
79,  gi,  92,  148,  149,  205,  358-361  ; 
benevolence  of  motive,  no  justifica- 
tion for  diversion  of  trust  property, 

357,  358  359- 

"  Trusts,"  origin  and  methods  of,  1 17, 
137;  effect  of,  in  limiting  produc- 
tion, 141,  142  ;  operations  of  the 
Chicago  Gas  "Trust,"  133-139; 
resort  to,  by  the  protectionist  to 
limit  production,  231-234  ;  growth 
of,  gradual,  143;  influence  of,  on 
public  and  private  morals,  146  ; 
powers  of,  essentially  public,  172  ; 
see  "Standard  Oil  Trust,"  "Gas 
Trust  "  ;  Reform. 

Tudors,  the,  despotism  in  England 
under,  5. 

U 

Unalienable  rights,    defined    by    the 


414 


INDUSTRIAL  LIBERTY 


Declaration  of  Independence  as 
"  life,  liberty,  and  the  pursuit  of 
happiness,"  253  ;  do  not  imply 
social  or  intellectual  equality,  253- 

^59.  265-         „  .         ^   ^     ^ 

"  Uiiderbilling,  evasion  of  the  Inter- 
State  Commerce  Law,  by,  165  n.  ; 
suggestions  of  Mr.  Albert  Fink  for 
renieily  of,  165  n. 

Union  Line,  a  parasite  of  the  Pennsyl- 
vania Railroad,  104,  121  ;  absorbed 
by  the  "Standard  Oil  Trust,"  122. 

Uniformity  of  faculty,  tendency  of 
common-school  system  to  produce, 
296  ;  advocated  by  Mann,  296. 

Union  Pacific  Railroad,  means  of  con- 
struction, I2g  ;  its  condition,  when 
control  was  assumed  by  Mr.  C.  F. 
Adams,  Jr  ,  190. 

Unity  of  faith,  methods  adopted  by 
the  Church  for  preserving,  compared 
with  those  of  the  common-school 
system,  292-296,  322-326. 

Usury  laws,  freedom  and  sanctity  of 
contract  impaired  by,  344-349  ; 
former  severity  of,  344,  345  ;  coun- 
tries and  Stales  in  which  they  have 
been  abolished  or  modified,  346  ; 
States  in  which  they  still  exist,  347 
n.  ;  effect  of  abolition  of,  upon  rate 
of  interest,  347.  34S ;  statute  of 
Massachusetts  abolishing,  347  n.  ; 
their  interference  with  the  natural 
current  of  business,  349  ;  evasions 
of,  349  ;  illustrations  of  fluctuation 
of  rates  of  interest  in  New  York, 
349  n- 


Vested  Interests,  opposition  of,  to  re- 
form. 196,  197. 

Voltaire,  his  Ofjposition  to  despotism, 
214  ;  the  eflect  of  his  influence  on 
the  progress  of  liberty,  213  n. 


W 


Wages,  effect  of  protection  upon,  236- 

248  ;    see  Laborer. 
Wainage,  seemed  from  unjust  seizure 

by  Magna  Charta,  3. 
Washington,  influence  of  Montesquieu 

upon,  II  ;  on  taxation.  243. 
Wealth,   how  far    a    test    of    national 

well-being,  52  ;   changes  in  the  dis- 
tribution of,  55. 
Webster,  Daniel,  emotional  character 

of  his  argument  in  the  Dartmouth 

College  case.  336  n. 
Weights  and  Measures,  regulation  of. 

by    government    not     paternalism, 

287,  354- 
Wells,  David  A.,  citations  from,  54. 
Western    Railway   of    Massachusetts, 

history  of  its  operations.  loi,  102. 
Whig    Party,   its   origin   in    England. 

ami  the  motives  which  characterized 

it,  366,  367. 
World-crowding,  essay  of  Mr.   Gmen 

on,  63  n.  ;    see  Population. 
Workingman,  see  Laborer. 


X 


Xenophon,  cited,  396  n. 


